Impact America Fund: Challenges of New Fund Formation

By Heidi Krauel Patel, Charles Ewald, Jaclyn Foroughi
2016 | Case No. SI139 | Length 23 pgs.

In July 2013, Kesha Cash transitioned out of her stable role as co-founder of and fund manager for Jalia Ventures (“Jalia”), an initiative investing in early-stage mission driven “businesses operated by entrepreneurs of color,” to launch her own impact venture fund focused on underserved communities.  Because Jalia had been funded and supported by Serious Change, L.P., a global impact investment fund, Cash was new to the process of fund formation.  She had heard that she needed at least $250,000 over a period of two years to get through the fundraising process but managed to launch the fund with a budget of just over a third of that amount in under two years while taking barely any salary. 

By December 2014, Impact America Fund (IAF) had its first official close at less than 50 percent of the target fund size—a strategic decision made by Cash to begin investing in order to prove that she could source and close deals on her own.  With her initial close, Cash’s vision of creating a fund focused on generating real financial returns while improving the wellbeing of underserved communities was realized.  Despite her success in bootstrapping the initial fund, Cash had much more work ahead of her.  In addition to managing investors and sourcing new deal opportunities, Cash now had to consider how to scale for later funds, and whether to continue to follow the fund’s original vision on her own, as she had already proven that she could do, or take on a partner in order to pursue strategic opportunities.  Indeed, the real work was just beginning.

This case describes the challenges faced in the formation of a sustainable for-profit impact venture capital fund.  It covers the origin of the fund; an overview of the fund’s structure and terms, investment strategy, early fundraising, and strategic opportunities; as well as a discussion of impact measurement.

Learning Objective

Provide students with an opportunity to understand the structure of an impact venture capital fund focused on the double bottom line. Measures of social impact are introduced for further analysis.
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