By Thad Moore
A few years ago, Gov. John Hickenlooper told Colorado investors such as Jim Kelley that they ought to do more to help local entrepreneurs.
The state has talent, the governor said, but businesses need better access to money and mentors.
Kelley, co-founder of Vestar Capital Partners, took the challenge to heart and began researching the issue. And soon, he said, he agreed with Hickenlooper.
At an event with Hickenlooper at the governor's mansion Tuesday evening, Kelley and Ryan Heckman of Excellere Partners officially launched the private Colorado Impact Fund, an investment group that aims to fix the problem -- and turn a profit.
"From an investor's point of view, we do business all across the country, all across the globe for that matter," Kelley said in an interview. "We're not always as focused as we should be on, 'How can we contribute to the community we live in?' "
The fund has $62 million to invest, all from a group of about 20 Colorado investors, Kelley said.
Colorado Impact Fund, which will also pair businesses with mentors and advisers, is likely to invest in 10 to 15 companies in the next five years. It plans to announce its first investment in the next few months.
When it picks businesses for its portfolio -- all from Colorado and all with at least $2 million in annual sales -- it will look for the potential both for profits and for impact on the state. Companies are expected to improve health, conservation, economic development or education.
Kelley said fund profitability is also important, so it can attract more investments and expand its reach. Kelley said the fund expects returns ranging around 20 percent per year.
"We feel like we're not going to move the needle if we become a philanthropic source of capital," Kelley said.
Colorado Impact Fund is the first of its kind in the state, Kelley said, but it's part of the fast-growing trend of "impact investing," which emphasizes making a difference alongside making profits.
A survey by J.P. Morgan and the Global Impact Investing Network found that 125 of the world's top "impact investors" plan to add to their portfolios. They expected to invest $12.7 billion this year, an increase of 19 percent.
Kelley said the Colorado fund is based in part on the Partnership Fund for New York City which was founded in 1996 and has invested more than $135 million. The Partnership Fund says it's created 10,600 full-time jobs and 23,000 part-time jobs in the city.
"This is also a state where we believe our bold capitalistic aspirations can be in harmony with our obligations to our fellow man," Hickenlooper said in a statement.