Social Impact Investors: How Allison Kelly Of ICA Fund Is Helping To Address Economic Inequality…

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Social Impact Investors: How Allison Kelly Of ICA Fund Is Helping To Address Economic Inequality Through Innovation

Founder Relationship: Building relationships with founders is important to us. When founders are part of the ICA community, it allows us to observe their coachability and character over time.

As a part of our series about “Social Impact Investors,” I had the pleasure of interviewing Allison Kelly.

Allison Kelly is deeply committed to fighting economic inequality through innovation and partnerships at ICA Fund, an impact-focused nonprofit venture capital fund, where she has been serving in the role of CEO since June 2019. Under Kelly’s leadership, ICA has more than tripled its net assets, its number of investments, the number of companies served, and the organization’s revenues. Before joining ICA, Kelly was head of strategy and innovation at CDC Small Business Finance and spent seven years in various leadership positions at Pacific Community Ventures.

Thank you so much for doing this with us! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?

My journey to this specific career path stems from a mix of following my heart and my orientation for solving problems. I’ve always been drawn to fields where I can actively contribute to finding solutions. Being aware of the racial wealth gap and systemic racism in the financial industry, I saw community development finance as a way to contribute to wealth creation and wealth distribution across the country.

Community development finance, however, is not just about numbers; it’s about empowering individuals with the agency to shape their lives and allocate their resources in a manner that aligns with their values. I knew this field would be a way to overcome existing barriers and provide individuals with more tools to lead more empowered lives.

Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Are there takeaways or lessons that others can learn from that?

I’ve spent over a decade in the community finance industry. At Pacific Community Ventures (PCV), I focused on implementation of strategies rather than setting a vision. Later, I became a member of the executive team at CDC Small Business Finance, a much larger organization. During my time at PCV, I started to get more interested in literature on effective leadership practices and understanding how good leadership can increase impact exponentially by bringing out the unique gifts of each of your team members. I knew I could make a change within those around me by taking on a larger leadership role, but my imposter syndrome held me back. I often questioned my own abilities.

Then in 2018, my grandmother passed away, which deeply impacted me because we were so close. I always admired my grandmother’s ability to influence others in the community, and she had always believed in me. Her absence made me see myself differently and consider that I could influence others in the way she did. Her loss was devastating, but it also marked a turning point for me. If she held such faith in me, maybe I should hold the same faith in myself and go after those higher career aspirations.

This realization became a catalyst for change. I made a promise to see myself through my grandmother’s eyes and realized my imposter syndrome was self-inflicted, particularly in the context of the finance industry where I had often downplayed my financial acumen. I recognized that I was free to make decisions that aligned with my values and experience, drawing from lessons learned from my previous experiences. Through this journey, I understood which strategies yield positive results and which don’t, and I focused on how to inspire the best from a team. I have chosen to center my leadership on the collective success of the team vs. the cult of personality that can happen sometimes when an organization centers itself on only its leader.

None of us are able to achieve success without some help along the way. Is there a particular person or mentor to whom you are grateful who helped get you to where you are? Can you share a story about that?

There are so many people who have helped me, believed in me, encouraged me, and made introductions as I’ve developed. I have to say the best mentorship I’ve received is from our current board chair, Jack Russi, who has the ability to demonstrate curiosity, push my thinking, and help me frame my ideas. He has been a true champion of my journey.

An example of this is when we refreshed our mission to center racial and gender equity at the heart of our work. I was brand new in the job, but I had met with over 90 stakeholders in 30 days and it was clear this re-positioning needed to happen.

He took the time to understand what I thought was important to achieve and brought in an external consultant to help facilitate the process, so our whole board could feel informed and supportive. And he’s continued to champion me since that moment four years ago and we’ve had a lot of impact since then as a result.

You have been blessed with great success in a career path that many have attempted, but eventually gave up on. Do you have any words of advice for others who may want to embark on this career path but are afraid of the prospect of failure?

I would encourage others to do what you love and be resilient.

Ok, thank you for that. Let’s now jump to the main part of our discussion. You are a VC who is focused on investments that are making a positive social impact. Can you share with us a bit about the projects and companies you have focused on, and look to focus on in the future?

ICA Fund is an impact-focused nonprofit venture capital firm. Our focus is on entrepreneurs with a strong growth mindset. We seek out individuals who have already established a proven product or service, are actively selling it, and are determined to take their business to the next level while also creating good jobs and share the wealth they create in different ways. This commitment to shared prosperity is a core value and a mission at ICA.

For ICA Fund, a growth mindset means openness to being advised, mentored, and supported. Coachability is the “X factor” for us. Being coachable means the entrepreneurs will change their behaviors as a result of information they get from someone who lived that experience previously.

Working with entrepreneurs who are dedicated to fostering both good jobs and wealth building within their communities will always be a priority for ICA Fund. We are continuously refining our programs and investment strategies to best serve the communities we operate in, with input from our entrepreneurs. Presently, we’re exploring opportunities to be catalytic across the country through partners that want to replicate all or part of our accelerator and investment model.

Our goal is to provide a robust framework that empowers others to follow in our footsteps, fostering economic growth, job creation, and wealth distribution in communities far and wide.

What you are doing is not very common. Was there an “Aha Moment” that made you decide that you were going to focus on social impact investing? Can you share the story with us?

ICA Fund is a community development financial institution, or CDFI. Since CDFIs were created nearly 30 years ago, the industry has done incredible work in delivering affordable capital to low- and moderate-income communities. But despite this, the racial and gender wealth gaps have consistently grown.

At ICA Fund, we started to consider whether there was a better way than debt, which is what CDFIs typically employ, to build a more equitable small business financing system. Debt products are inherently racist and sexist due to the mechanisms they use to mitigate their risk. The mechanisms make sense when you look at how they emerged, but we need additional mechanisms that don’t include what we now know to be systemic discrimination.

We realized that through convertible notes and equity funding, you can circumvent many of the racist and sexist aspects of our financial system like credit scores, collateral requirements, secondary sources of income, and asset ratios. Recognizing that there is an alternative, viable, and legitimate way to deploy capital that avoids all of these problematic parts of our financial system was the “A-ha” moment for me. As soon as I learned this alternative was a possibility, I knew I wanted to do my part to move the financial system in that direction.

Can you share a story with us about your most successful Angel VC investment? Or an investment that you are most proud of? What was its lesson?

My sense of pride doesn’t stem from a single standout investment, but rather from the entirety of our portfolio. Every single company we invest in is narrowing the racial and gender wealth gaps through their own unique models. For example, in 2022, the 117 companies that worked with ICA had a 16% overall job growth, contributing a total of 836 local jobs in the Bay Area. They have different approaches, but we can apply creativity to still get to the same shared outcomes that we want to see.

That’s what’s missing in our traditional financial system. We have a lot of cookie cutter boxes to shove people into, but everyone can’t fit into those boxes in the timeline that is expected. In traditional VC models, there’s a strong emphasis on short-term extractive results, and it’s not sustainable. I am proud of our entire portfolio and how each individual investment is contributing toward business growth and wealth-creation for founders and their employees.

Can you share a story of an Angel or VC funding failure of yours? What was its lesson?

There was a situation where we gave too much money, too fast. We didn’t recognize the appropriate size of capital soon enough. We’re grateful that the company didn’t fail outright. The lesson I took away from this experience was about the importance of incremental funding, especially when dealing with early-stage businesses, and working closely with entrepreneurs to understand together what their business really needs and when.

Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?

Many years ago, ICA provided business advice to a coffee company through our Accelerator program, but we didn’t have the capital at the time to invest, so we missed out on this opportunity. That company was Blue Bottle Coffee. While unfortunately, we couldn’t invest, that experience is what led the ICA team and board at the time to establish our investing practice. So this isn’t a regret as much as it is an experience that has led to a lot of opportunities for small businesses in the Bay Area, as well as ICA.

Super. Here is the main question of this interview. What are your “5 things I need to see before making a VC investment” and why?

  1. Team and Founder Fit: We look for founders who have the right skills, mindset, and passion to drive the business forward.
  2. Solid Business Potential: We assess the business’s scalability, traction, product-market fit, and potential for exit.
  3. Founder Relationship: Building relationships with founders is important to us. When founders are part of the ICA community, it allows us to observe their coachability and character over time.
  4. Social Impact Considerations: We want to work with founders who share our commitment to creating positive social impact through our investments. We evaluate whether the business has a plan to create good jobs, promote employee health and wellness, and potentially implement profit-sharing mechanisms. We also emphasize diversity within the management team and board.
  5. Access to Capital for Underrepresented Founders: We recognize that underrepresented founders often lack access to traditional funding sources — including bank funding or being able to tap into personal or family wealth — due to systemic barriers. Countering this is a core part of our investment strategy.

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

If I could inspire a movement, it would be to create a fundamental shift in the financial system, particularly within the U.S. Federal Reserve. I envision a system that expands beyond the traditional backing of banks and embraces a diverse array of financial tools, promoting financial inclusivity and equitable access to resources that more effectively distribute wealth. This movement would also include the creation of feedback loops so that it could continue to evolve to meet the needs of the community. This movement would ensure that the allocation of capital is not only efficient but also responsive to the evolving needs of the population it serves — every individual in the US.

If you could tell other young people one thing about why they should consider making a positive impact on our environment or society, like you, what would you tell them?

It’s easy for people to get trapped in a cycle of thinking that making as much money as possible brings happiness. But our lives are a limited resource, and true happiness comes from contentment, fulfillment, and purpose. Following that purpose leads to a long-term fulfilling life. Having enough money to provide for yourself and your family is critically important, but fulfilling your unique purpose in life — that’s what will continue to contribute to your joy.

We are very blessed that a lot of amazing founders and social impact organizations read this column. Is there a person in the world with whom you’d like to have a private breakfast or lunch with, and why? He or she might just see this. 🙂

Michelle Obama. The way that she owns her power in an unapologetic and non-ego-driven way is absolutely remarkable. I admire the way she was able to stand beside her husband for eight years doing a job she did not necessarily seek out, make it her own, and use her platform to be as positively impactful as possible. I would love to talk to her about her mindset and inner fortitude required to keep her positive leadership despite strong headwinds.

How can our readers follow you online?

Thank you so much for this. This was very inspirational, and we wish you only continued success!

Social Impact Investors: How Allison Kelly Of ICA Fund Is Helping To Address Economic Inequality… was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.