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ImpactAssets 50: A Global Landscape of Impact Investment Fund Managers
The ImpactAssets 50 (IA 50) is the first open-source, publicly published database of experienced private debt and equity impact investment fund managers.
https://www.impactassets.org/impactassets-50

ImpactAssets 50

An Annual Showcase of Impact Investment Fund Managers

IA 50 2019 PROFILE

Community Investment
Management

Total Assets Under Management: $100 – 499M
Asset Class: Cash / Cash Alternatives, Private Debt - Absolute Return / Notes
Primary UN Sustainable Development Goal: 8 – Decent Work & Economic Growth
Small/Medium Business Development
Microfinance, low-income financial services & micro-insurance

Firm Overview

Category: Private Debt - SME Finance (US)

Community Investment Management (CIM) is an institutional impact investment manager that provides strategic debt funding to scale and demonstrate responsible innovation in lending to small businesses and underserved borrowers in the United States. CIM partners with transparent and responsible lenders to finance creditworthy but underserved US businesses and borrowers in line with the RBLC's Small Business Borrowers' Bill of Rights and CFSI's Compass Principles and to effect positive economic, environmental, and social change. Across the portfolio, CIM funds 2-­3x more women, minority, and veteran­-owned businesses than banks and financial institutions.

Firm Headquarters: US & Canada
Years of Operation: 3 – 4 years
Total Assets Under Management:
$100 – 499M
Total Number of Investors: More than 25
% of Capital from Top 3 Investors: Less than 25%
Investment Thesis:

CIM provides strategic debt funding to scale and demonstrate responsible innovation in lending to traditionally underserved communities in order to advance financial inclusion, improve financial health and drive widespread adoption of such innovation by the financial mainstream.

Investment Overview:

Despite record credit expansion in the U.S. economy, affordable financing for small businesses and historically underserved communities remains largely inaccessible from traditional lenders. Over the past decade, alternative lenders with practices ranging from responsible to predatory have emerged to address this lending gap. CIM's investment strategy is to partner with those responsible and transparent lenders with compelling innovations to efficiently acquire, underwrite, align incentives with and service small business and historically underserved borrowers. CIM creates custom transaction structures with risk­-sharing mechanisms and purchases loans through bankruptcy remote structures. The Fund seeks to deliver attractive risk­-adjusted returns to investors with a short duration, fixed income product that provides both financial return and positive social impact. To date, CIM has partnered with ten innovative lenders, providing $500 million in funding to 60,000 small businesses and individuals in the United States.

Company Differentiator:

Since inception, CIM has established itself as a leading voice for responsible lending practices, a differentiator which has brought a number of lasting advantages. Our partner selection screens for impact and allows us to identify early lending innovators that demonstrate responsible and transparent practices. Our model is characterized by deep engagement with the lender, the achievement of structural alignment between our investors and lenders which incorporates effective mitigants such as bankruptcy remoteness and first loss credit enhancement, and a comprehensive monitoring procedure to ensure portfolio quality is maintained under growth. This has given us a market leading position as a provider of strategic capital and insight. CIM is a co-founding signatory of the Guidelines for Investing in Responsible Digital Financial Services, member of the Executive Committee of the RBLC, CFSI, Impact Capital Managers, GIIN Investors' Council, and chairs the Investors' Council of the Marketplace Lending Association.

Investment Example

CIM structured a $100mm debt facility to Lighter Capital, a Seattle-based fintech company that provides non-dilutive growth capital to early-stage tech companies. Lighter serves fast-growing small technology businesses, a unique segment of underserved businesses, with a transparent and responsible revenue-based financing loan product. Lighter's product is a compelling innovation for its small business customers, aligning debt payments with actual financial performance. Lighter is a signatory to the Small Business Borrowers' Bill of Rights, which calls for fair, transparent and responsible loans to small businesses. Lighter demonstrates strong borrower-centric business practices such as APR disclosure and reports borrower payment data to credit bureaus, allowing borrowers to benefit from positive payment behavior. The transaction was structured to isolate bankruptcy risk and provide credit enhancement, aligning incentives of all parties to optimize each investment and deliver attractive risk­-adjusted returns. CIM's facility enabled the deployment of $125mm+ in loans to 270+ businesses.

Leadership and Team

Cumulative Leadership Experience in Investing:
30 years or more
Cumulative Impact Experience of Top Three Firm Leaders:
30 years or more
Jacob Haar – Managing Partner, Head of Investments and Operations More Info

Jacob Haar serves as Managing Partner of Community Investment Management and leads the firm's investment and operations activities. He was co-founder of Minlam Asset Management, an investment advisor which launched and managed Minlam Microfinance Fund, the first global investment fund focused on providing local currency debt investment to micro, small, and medium enterprise (MSME) lenders in emerging markets. Mr. Haar served as Managing Director of Minlam from 2005 to the Fund's acquisition in 2012 and managed MSME investments, fund and firm operations, and public-private partnerships. Following Minlam's acquisition, Mr. Haar oversaw Minlam Microfinance Fund's transition to the MicroVest GMG platform and served as a Partner of the acquirer, GMG Investment Advisors, where he continued working on MSME investments and fund operations until founding Community Investment Management to focus on the United States MSME market in 2013.

Michael Hokenson – Partner, Business Development More Info

Michael Hokenson serves as Partner of Community Investment Management and leads business development for the firm. He was co-founder of Minlam Asset Management and served as Managing Director from 2005 to 2012, where he developed an extensive network of global institutional and individual investors for Minlam Microfinance Fund. Mr. Hokenson served as a member of the fund's Investment Committee and performed credit analysis including on-site due diligence and monitoring of active investments. Following Minlam's acquisition, he joined TriLinc Global LLC as Director of Sales to launch the first SEC-registered impact investment fund in June 2013 focused on emerging market SME private credit.

Olympia De Castro – Partner, Strategy & Investments More Info

Olympia De Castro serves as Partner where she focuses on strategy and investments. Prior to joining Community Investment Management, she worked as a consultant at The Louis Berger Group, providing advisory to multilaterals and government on infrastructure related projects. Ms. De Castro was a Director at Global Securities Capital Partners, a private equity firm focused on mid-cap opportunities in high growth, medium risk sectors in Colombia. In 2011 she worked at the IFC in the Global SME Banking group aimed at improving access to finance for SMEs globally. From 2009 to 2010 Ms. De Castro held a number of roles in the microfinance industry including portfolio management, investments and debt capital markets. Previously, she spent three years at Goldman Sachs' Investment Banking Division and one year in its Private Wealth Management Group.

Percentage of Investment Professionals who identify as women:
Percentage of Investment Professionals who identify as a person of color:*
Percentage of Senior Management Team who identify as women:
Percentage of Senior Management Team who identify as a person of color:*
*People of color include: Black, Latinx, Asian, Native American/Alaskan Native, Pacific Islander, Middle Easterm and multi-racial Americans

Financial Performance

Target Financial Returns Relative to Benchmark:
Above Market Rates
Actual Performance Relative to Target Financial Returns in the Past Three Years:
In line with initial target returns
Financial Reporting Frequency to Investors or Donors
Quarterly

Impact Performance

Percentage of Total Assets Under
Management that are Impact Investments:
100%
Primary Impact Outcomes:
Creating jobs
Increasing access to financial services
Secondary Impact Outcomes:
Addressing climate change and environmental issues
Alleviating poverty
Increasing access to education and improving educational outcomes
Increasing access to healthcare services and improving health
Promoting arts and media
Value-added Services Offered:
Access to markets
Business and legal training
Financial literacy training
Technology training

Investments systematically target companies where social and/or environmental impact is integral to the product/service being created:

While many alternative lenders engage in predatory lending practices by providing high interest, short-­term loans without transparent terms which borrowers cannot afford, CIM systematically partners with responsible and transparent lending partners that provide affordable loans to creditworthy borrowers with transparent terms. Our lending partners' practices conform with the Responsible Business Lending Coalition's (RBLC) Small Business Borrowers' Bill of Rights (BBoR) and Center for Financial Services Innovation's (CFSI) Compass Principles, ensuring that all borrowers are treated fairly and all loans are offered with transparent terms and are non­abusive, underwritten responsibly, non­discriminatory, and subject to fair collection practices. In addition to selective capital deployment, CIM engages in advocacy efforts to guide the fintech industry to responsible practices through our leadership as Chair of the Marketplace Lending Association, Executive Committee member of the RBLC, author of the BBoR, as well as our field building work on improving financial health with the CFSI.

Impact Tracking and Monitoring

Impact is Tracked:
Yes
Social and/or Environmental Impact is Reported to Investors and Donors:
Yes – to investors and donors
Third Party Validations:
Participant on steering committees or leadership roles within impact industry associations
Publisher or contributor to industry white paper or other research in impact investing

Learn More

Key Contact Name: Jacob Haar
Phone: (415) 857-3233
Mailing Address:

755 Sansome Street, Suite 450, San Francisco, CA 94111

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