21 Feb Invest Appalachia
Interview with Andrew Crosson; CEO of Invest Appalachia
Jen: How was Invest Appalachia Created?
Andrew: Invest Appalachia was started in response to the identified need for more flexible capital and capacity to plug gaps in the region’s investment system. A 5-year collaborative research, planning, and design process involved dozens of stakeholders representing CDFIs, local foundations, grassroots nonprofits, economic development professionals, and government officials. IA formed as an organization out of this process, but continues to function as a collective of stakeholders.
Jen: How are your investment funds catalytic in a way that is different from other funds?
Andrew: Invest Appalachia is unique as a fund in multiple ways. 1. It is a closed-end equity fund structure, which aggregates large-scale impact capital from a variety of actors, shares risk across investors and provides the flexibility to deploy flexible, higher-risk capital than what CDFIs and other lenders can provide. 2. It is partnership-first, meaning we will invest alongside and often subordinate to place-based lenders and investors who share our mission but have challenges deploying their capital in underserved communities. 3. It is multi-sector and diversified across asset classes, allowing investment in a diverse array of community development projects, from food & Ag enterprises to downtown revitalization to community health facilities. 4. It helps investment-worthy projects overcome financial obstacles to become investment-ready, by providing credit enhancements that plug collateral/credit gaps and absorb risk on behalf of low-wealth borrowers and mission-aligned investors.
On the governance side of things, IA shifts power by incorporating community accountability and stakeholder governance at every level, from the board of directors to the investment committee to the community advisory council. IA also proactively works to build a more inclusive pipeline of projects by providing capacity-building, training, and pre-development support for grassroots actors and underserved groups.
The Fund invests in brick and mortar projects, as well as providing flexible working capital. Businesses and entrepreneurs make up a subset of our investments, but are critical to our overall impact. They will provide on-the-job training and career development opportunities, plug gaps in key industries like food systems and clean energy, and anchor local economic diversification efforts.
Jen: How do you describe the kind of non-financial returns the fund offers?
Andrew: Invest Appalachia’s non-financial returns include cross-sector impacts such as increased access to capital in underserved geographies, locally-rooted wealth and capacity, economically viable and livable communities, improved health outcomes and well-being for residents, improved resource conservation and environmental sustainability, and a more positive and empowering narrative defined by residents.
Jen: Can you describe how you use integrated capital to do your work?
Andrew: IA combines 3 forms of capital: social, investment, and catalytic. Social capital is non-financial and takes the form of ecosystem coordination, strategy sharing and analysis with regional networks and place-based actors (https://www.cannetwork.org/), and capacity-building (https://wvhub.org/investmentframer/). Investment capital takes the form of a targeted $40 million social investment fund that provides flexible, often subordinated, loans to community projects and businesses. Catalytic capital is raised as grants/PRIs, and deployed based on community advisory council guidance to plug collateral/credit gaps in individual projects (loan guarantees, etc.) as well as capacity gaps/leverage points in industries or sector clusters.
Jen: How do you address racial justice, income inequality, and/or gender justice through your products and services?
Andrew: IA is an impact-first investment platform. All our investments and activity serve historically marginalized populations and aim to alleviate poverty and create more inclusive, resilient, and locally-rooted economies. Our impact framework targets sector specific outcomes as well as 3 cross-sector goals: 1) Increased socioeconomic and racial equity, by addressing systemic barriers to capital and prioritizing investment for people of color, women, displaced workers, & at-risk populations. 2) Community wealth-building, by focusing on projects/businesses that advance local ownership, community control, quality living wage jobs, and local capacity. 3) Sustainability & climate resilience, by investing in resource conservation, working landscapes, renewable energy, and remediation/mitigation of fossil fuel industry legacy.
Jen: What do you tell people who think your fund is risky?
Andrew: The risk of not investing in IA is that business as usual continues, in which the economic system and the impact investing system in particular continues to overlook historically disinvested communities like Appalachia. This fund can help to prove that community-first investment, local wealth-building, socioeconomic equity, and sustainability can drive a new economic future for a region that American society has written off. https://nonprofitquarterly.org/countering-rural-disinvestment-appalachias-ecosystem-based-approach/
Investment Thesis/What is your rationale for your approach to investing? Invest Appalachia is a community-controlled regional social investment platform, designed to accelerate and expand community investment across Central Appalachia. IA partners with place-based intermediaries to support community projects with a blend of flexible investment and catalytic capital. IA focuses on sectors and projects that advance equity, sustainability, and community wealth.
Geography: The Appalachian counties of NC, TN, VA, KY, WV, OH, with a focus on economically distressed and coal-impacted areas.
Year Founded: 2019
# of Investments: 11
# of Investors: 15 (donors, funders, supporters, investors)
Funds Raised: $22,700,000 since inception
What’s on Andrew’s Mind?
Book: Lark Ascending, by Silas House. A vivid, harsh, and heartfelt take on the post-apocalyptic genre, from a great current Appalachian author.
Song: Sierra Ferrell, Years.
Podcast: Dolly Parton’s America