Community Development Venture Capital (CDVC)
Community Development Venture Capital
FRBSF Community Investments (pdf, 83 kb)
Kerwin Tesdell, Community Development Venture Capital Alliance
CDVC organizations use the tools of venture capital to conduct community and economic development activities as defined in the CRA regulation. CDVC funds make equity and equity-like investments in small businesses that hold the promise of rapid growth and a “double bottom line” of not only financial returns but also community and economic development benefits. CDVC funds come in many different forms, including not-for-profit, for-profit and quasi-public organizations. Their structures encompass for-profit “C” corporations, limited partnerships, limited liability companies, community development corporations (CDCs) and Small Business Investment Companies (SBICs). CDVCs fund investments ranging from the purchase of preferred and common stock to the provision of subordinated debt with equity “kickers” such as warrants or royalties. Investments in CDVCs should be carried as investments on the investing institution’s balance sheet in accordance with Generally Accepted Accounting Principles (GAAP).