14 Jun Denkyem Co-op
Denkyem Co-op
Interview with Dion Cook; CEO of Denkyem Co-op
Jen: How was Denkyem Co-op Created?
Dion: Denkyem was created to address the financing challenges facing Black-owned businesses. Dion Cook & Rudy Gadre believed that entrepreneurship was the most accessible vehicle for building generational wealth, community jobs, and self-efficacy. We wanted to remove barriers for Black-owned businesses to succeed. Traditionally, collateral and credit scores are weighed heavily in loan decisions. However, this is without accounting for the fact that Black communities have been strategically barred from acquiring appreciating assets, or that we have needed to leverage credit for basic needs. This leads to Black entrepreneurs being denied for loans two-times more than their white peers. Denkyem was created to fill that void, to create trusted pathways for Black entrepreneurship and innovation.
Jen: How are your investment funds catalytic in a way that is different from other funds?
Dion: Denkyem moves beyond systemic barriers, earns trust, and leverages deep collaboration to invest in a thriving Black Business Community and increase self efficacy. If nothing else, increasing self-efficacy would be a worthwhile realization of our vision. Our approach empowers applicants to identify their impact in their communities and to continue doing good work. In addition, we have noted a sense of relief when we explain that collateral and credit scores are minimally weighed in our decision-making process. This revelation levels the playing field and creates a solid foundation for trust & collaboration. Denkyem evaluates the contributions made by entrepreneurs to their communities and their cash flow with similar weight. Simply put, we want to make sure that borrowers can afford to take on our loans, as we are trusting their ability to do so. We believe that businesses that are deeply rooted, and active, in their community have high social collateral and are more likely to repay their debt. Our ideal client understands their success cannot be severed from the health of their local community. Our network of entrepreneurs has the potential to transcend the sectors & industries that usually house Black entrepreneurs, due to high costs of entry and other barriers. Given the right amount of time, support, and resources, our portfolio can realize visions that were obstructed in the past.
Jen: How do you describe the kind of non-financial returns the fund offers?
Dion: The non-financial returns from Denkyem’s activity can be measured by the well-being of our clients. When an entrepreneur knows that their business’ needs are met, they can start to focus on planning for growth. Without this, businesses are stuck in the moment, and constantly reacting to the ebbs and flows of entrepreneurship. With our support, businesses can breathe, think, and and innovate to create a thriving Black community.
Jen: Can you describe how you use integrated capital to do your work?
Dion: Denkyem leverages support from organizations, government entities, and enterprises. In addition, we have built relationships with local entrepreneurs, patrons, and accredited investors. Over the last four years, We’ve raised grants, recoverable grants, equity, and are preparing to diversify even further with impact debt notes. By vying for a wide range of capital, we can keep the costs low for our clients. Furthermore, we prioritize building trust with all our stakeholders. This leads to organic referrals from current & past clients, collaboration with other lenders & TA providers, and introductions to new donors & investors. Lastly, with our recent CDFI certification, we now have access to a network of mission driven community loan funds that will add value to our work.
Jen: How do you address racial justice, income inequality, and/or gender justice through your products and services?
Dion: Denkyem advances racial & social justice by providing Black businesses with the financial runway they need to realize their goals. When the top sources of start-up funding for all small businesses are personal savings, personal credit cards, bank loans, and support from family and friends, but median wealth in the Black community is very low and there is much less involvement with mainstream banks, it can be derived that many good ideas never make it to market. This includes ideas that might positively impact climate, gender, and income justice. Denkyem provides chances for Black entrepreneurs to learn and grow, with support.
Logan Niles Pot Pie Factory
Jen: Can you share with us an example of an investment?
Dion: Karl had owned Jacob Willard Home, a mid-century furniture store, for five years. He had a history of building supportive relationships with other businesses in the neighborhood and had an excellent reputation with the greater community. He was at a crossroads, deciding whether to stay open, or move on to a new endeavor. At the same time, he knew the potential & value that his niche brand had to offer. His space has always been a community center.
He was thinking of revamping his storefront to be less of a workshop/warehouse and more of a showroom for finished products. Although the former played a big role in the aesthetic that his clients had grown to love, he knew that in order to reach larger goals, he would have to make a shift. Karl was looking for a $10,000 loan, with the end goal of an increase in revenue. Thankfully, after building a relationship, he decided to trust Denkyem.
Our loan terms are three years in length, with a loan fee of 1.1x return (translated to APR it would be 6.29% at maturity), and repayment is monthly as an agreed upon percentage of revenue (current maximum of 5%).
Since then, he logged some of his best months of revenue in the last quarter of 2020 and first Q2021! In conjunction, he was prepared to move into his second location (a warehouse/workshop) to expand his offerings, as well as paying off his loan early!
Denkyem played a pivotal role by investing in Karl during a time where he was considering closing shop. He chose us because of trust built over time, our community-oriented values, and our responsive payment option. He is now thinking strategically about how to build off his success, stabilize, and scale his business.
Jen: What do you tell people who think your fund is risky?
Dion: Denkyem measures success by the number of Black-owned businesses that remain in business and experience growth. Growth doesn’t always come in the form of employment, revenue, and profit. As mentioned before, growth in self-efficacy is an excellent indicator of our success. If a borrower has more confidence in themselves and their work, then we all win. If Black entrepreneurs have more confidence to make mistakes, learn from them, and keep going, that’s another win. We’ve received feedback from past clients that the fact that we believed in them was more valuable than the financing alone. The risk of not investing in Denkyem is seeing a lot of potential community changing businesses disappear before they get a chance to realize their potential.
Investment Thesis/What is your rationale for your approach to investing?
Denkyem is building a thriving Black business community that serves as an anchor to Black economic mobility. We distribute responsive capital and personalized support services. We fund companies that prioritize their communities. Denkyem believes that an entrepreneur that can find success, stabilize, and maybe even scale, can, and should, positively impact their community.
Geography: Currently, we are focused on King County/Pierce County, in Washington state. However, we have the goal of serving all of Washington state in the next couple years.
Year Founded: 2018
# of Investments: 24
# of Investors: 50 (donors, funders, supporters, investors)
Funds Raised: $1M since inception
What’s on Dion’s Mind?
Book: Radical Friendship: Seven Ways to Love Yourself and Find Your People in an Unjust World by Kate Johnson (Thank you, Threshold Philanthropy!)
Song: Liberation by Outkast (Thank you, Outkast!)
Podcast: Soulection on Apple Music (Thank you, Kenny!)