Deep Dive on Deals: Ebiara Fund
MIE is pleased to present “Deep Dive on Deals,” a program series that showcases our members’ investments.
Through Virtual Learning Opportunities and separate foundation member-only gatherings, we are bringing first-hand experiences that showcase the nuts and bolts of impact investing.
For this session, MIE will present the Ebiara Fund. Ebiara makes investments in Detroit-based, Black and Brown-led development firms to accelerate their ability to scale. The Kresge Foundation’s support came via a $10-million investment to establish the fund with CDFI partner Invest Detroit, which added $1 million to the fund. Ebiara is managed by a Black-led development & consulting firm. The goal of Ebiara, which is named after an African wood, is to grow the fund to $100-200 million, so that Black and Brown-led development firms will have access to equity capital needed to take on larger-scale projects and be a part of the revival of Detroit’s neighborhoods.
We welcome all MIE members and special invited guests to join our Virtual Learning Opportunity (VLO) on Ebiara. Through a moderated conversation with Ebiara investors and practitioners led by James Wahls, MIE’s senior vice president of programs and initiatives, we will discuss the problem addressed, investment structure and terms, investment scaling, due diligence and underwriting, legal and closing dynamics, and post-closing monitoring. To learn more about Ebiara, visit MIE’s investment spotlight here. We also held a related follow-on program, “How the Deal Gets Done - Internal Foundation Practices”, for our foundation members only.
Takeaways
Funding a BIPOC-led development firm, instead of only funding a single project, helps the firm build capacity and scale their work.
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Ebiara is a unique approach to providing emerging Black and Brown-owned real estate development firms access to capital and resources to build capacity for firms acquiring and developing Detroit projects.
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Sharing the equity risk with BIPOC development firms allows psychological safety and capacity to scale and turn one deal into multiple.
Equity replacement capital, grant capital and other patient capital, were all key structure tools identified from collective marketplace research and expertise from the field.
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Giving BIPOC development firms five-year term loans allows them to grow skill and put the money to projects and to stimulate general wealth and generational wealth creation.
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Grant strategy and impact investments cannot be looked at separately. Grant capital is critical for funding operations of pilot strategies to lay the foundation for scalability.
When it comes to due diligence, foundations must bet on institutions that have shown a strong track record and get their mission across the finish line. Trusting the people who have the most legitimacy and who have proven track records, even if at a different scale, will pay off in dividends.
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Due diligence, and the underwriting, is also about being supportive. Recognizing what you as a funder bring to the table, what other tools and resources and collaboration do you have to help build growth opportunities for BIPOC development firms?
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Remember collaboration is key to credit underwriting. Betting on partnerships in which folks are open, honest, and focused on the same community outcomes led to stronger products in the marketplace.
Final takeaway–When trying to change outcomes for place-based work, foundations have to think much broader, much more holistically about how to invest capital. Being confined to “project by project” financing, continues to lead to “project by project” results.
