Investing in Underserved Communities

Tawny Holguin speaks with Kesha Cash, founder of Impact America Fund, about investing in businesses serving underserved communities. Both discuss investments and companies in which they have a business interest.

Cash says her fund invests around the seed stage and continues into later rounds, seeking companies that serve communities often overlooked by investors. She says part of the work is explaining unfamiliar markets to potential backers.

She cites an impact-investing survey from the time to argue that early-stage capital was scarce relative to later-stage capital. The figures are historical survey data, not current market statistics.

Cash defines impact investing as seeking social or environmental outcomes alongside financial returns. Investors differ in their target returns and the issues they prioritize.

The fund uses external surveys and its own measures to consider job creation and value for employees, suppliers and customers. She notes that impact can be assessed in several ways.

Cash recalls growing up in a low-income family and benefiting from public education. Her experience informs her view that people in underserved communities are assets with potential.

She looks for inefficiencies that technology or better infrastructure might address, with the aim of improving incomes and outcomes for low- and moderate-income communities.

Cash wants to work with conventional technology investors while bringing knowledge of markets they may not know. She believes these communities contain substantial business opportunities.

She describes high fees and poor-quality essential services as burdens on people with limited money and time. Her argument is that better products could create value for customers as well as businesses.

Asked whether impact investing is charity, Cash distinguishes different return goals. Her fund aims for market-rate or higher returns, but an aspiration is not a guarantee.

She says people with direct knowledge of a community may recognize real spending patterns and ways to redistribute value along a supply chain. Her aim is to find a benefit for both community and investors.

Cash recalls Madam C. J. Walker’s hair-care business and its network of women agents. She presents the historical example as an enterprise that offered both a product and income opportunities.

The conversation turns to Mayvenn, an e-commerce company backed by both investors. Cash says many stylists recommend hair products without receiving a commission or holding their own inventory.

She describes Mayvenn’s model: stylists refer customers to an online portal and receive commissions on purchases, avoiding the need to buy and store inventory themselves.

Cash argues that the platform can build on stylists’ existing skills and relationships rather than requiring them to change professions. Her income examples are illustrative claims from the interview.

Holguin explains why a16z looked at the opportunity: the firm sought markets outside familiar networks and saw a founder with a compelling connection to the problem. This is an investor’s assessment.

Cash says many founders the fund backed did not initially call themselves impact entrepreneurs; they were building businesses around problems they knew personally. The fund applied the impact lens to that work.

The speakers discuss expanding whose problems and experiences are represented in technology. Cash argues that evaluating the best founders requires giving a wider range of people access to capital and networks.

She recalls earlier work investing in entrepreneurs of color and says the experience shaped her fund’s emphasis on businesses serving underserved markets.

Cash hopes a successful approach could attract more capital and improve outcomes in health, education and income. These are long-term aspirations, not results established by the conversation.