Energy company Exelon is creating a new fund to invest in minority-owned companies in the communities it serves, including Baltimore.
The company is creating a $36 million Racial Equity Capital Fund that’s designed to help businesses grow and create jobs in communities that are typically overlooked by investors, the company said. It will provide loans of $100,000 to $300,000, as well as equity investments of “nearly $1 million,” per a news release, though no timeline for loan rollout was announced.
“Too often, we see small, minority-owned businesses struggle to obtain financial backing to fuel their ideas and innovations, and that problem has only grown worse during the pandemic,” said Calvin Butler, CEO of Exelon Utilities, in a statement. “Yet these same entrepreneurs are often the greatest source of economic opportunity in their communities, especially in underserved and under-resourced areas that struggle to attract major service providers, retailers and other community-sustaining employers. With this fund, we can help minority job creators overcome barriers to their growth and success and ensure that the benefits of our post-pandemic economic recovery are shared more equitably.”
Exelon, which has a large tower in Baltimore’s Harbor Point, is the parent company of Baltimore Gas and Electric, the main power provider in Baltimore. Butler, a prominent leader in Baltimore’s business community, was formerly CEO of BGE prior to his current role. The company’s utilities also include Atlantic City Electric, ComEd, Delmarva Power, PECO and Pepco.
Funded by Exelon Utilities in partnership with the Exelon Foundation, the fund will be managed by DC-based investment management firm RockCreek.
It aims to be a resource for minority-owned businesses, who face disparities when it comes to getting access to capital. A 2018 U.S. Small Administration report found that personal and family savings was the primary source of startup capital for more than 70% of business owned by Black, Latinx and Asian entrepreneurs. When it comes to venture capital, Crunchbase News reported that Black-founded U.S. companies received 1.2% of all dollars invested in startups during the first half of 2021. In 2020, Black founders received .6% of all VC funding.
“RockCreek is excited to join with Exelon’s utilities business to invest the Racial Equity Capital Fund, which will bring much-needed capital to minority businesses to help them grow, create jobs, and strengthen communities in the years and decades to come,” said Afsaneh Beschloss, CEO of RockCreek.