Dealflow | September 8, 2021

Employee Ownership Catalyst Fund raises nearly $5 million to back worker-ownership conversions

Roodgally Senatus
ImpactAlpha Editor

Roodgally Senatus

ImpactAlpha, September 8 — The open-ended fund, co-managed by Mission Driven Finance and Project Equity, received commitments from Living Cities and other impact investors, as well as foundations, high-net-worth individuals and a donor-advised fund.

The growing number of employee-ownership transition funds spare investors the burden of searching out direct investments (for context, see “These 12 impact funds are catalyzing transitions to employee ownership).

The Employee Ownership Catalyst Fund is looking to raise $20 million to provide flexible financing for local small and mid-sized business owners transferring their ownership to employees.

“Small businesses have a hard enough time accessing capital especially for low-asset service-oriented businesses,” said Mission Driven’s David Lynn. “When you throw employee ownership on top of it, most traditional capital can’t play.”

The fund will finance all types of employee ownership deals, including employee stock ownership plans, or ESOPs.

Inclusive economy

Mission Driven Finance and Project Equity are seeing a wave of retiring baby boomer business owners retiring who are looking to transfer ownership to employees rather than selling or closing.

“This creates a path to business ownership for frontline workers and workers of color, addressing issues of income and wealth inequality and creating more resilient local economies,” Project Equity’s Alison Lingane said.