Real Leaders

Changing the Financing Model

Prioritizing equity and empowerment for entrepreneurs and business owners is a winning formula.

By Kathryn Deen

Since its founding in 1992, Advantage Capital has invested over $4.1 billion in over 900 companies, spanning a diverse array of industry sectors and covering the entire risk spectrum through a combination of public-private partnerships. In addition to growing small businesses, the company finances affordable housing and expands renewable energy solutions. Real Leaders connected with President Steven Stull to learn how Advantage Capital is helping lead the way in the impact investing space.

Real Leaders: Describe the problem Advantage Capital is trying to solve.

Steven Stull: Since the founding of our firm, we have worked to bring businesses, jobs, and technologies to communities that have historically lacked access to investment capital. 

Those in underserved communities often face economic instability, a volatile housing market, limited opportunities for quality jobs, and various financial burdens. We leverage our investment acumen, legislative experience, and our emphasis on impact to funnel capital to growth-ready entrepreneurs, innovators, and industries in overlooked areas. We invest with intention in job-generating small businesses — along with affordable housing developments and renewable energy solutions — to grow economies and communities.

RL: What are the company’s most innovative ways of addressing lack of access to investment capital?

Stull: We uncover and implement innovative, flexible financing solutions often enabled and accelerated by public-private partnerships, and we meticulously measure the investment outcomes.

It is important to actively advocate for proven public policy that establishes partnerships with state and federal economic development organizations to turn incentives into investments into impact. For Advantage Capital, we have always worked to expand the scope and compliance of tax credit programs to, in turn, expand access to capital across the country beginning with one fund in one state — specifically for small businesses — to dozens of states and programs that include low-income housing and renewable energy investment.

RL: Can you share a couple of Advantage Capital’s success stories?

Stull: After being denied by more than eight banks, Carmen Tapio partnered with Advantage Capital and secured a $1.5-million small business loan in connection with the federal and state New Market Tax Credit (NMTC) programs. The loan allowed her to purchase North End Teleservices, a call center in the highly distressed community of North Omaha, Nebraska. Carmen has grown the company to over 500 employees, providing household-stabilizing benefits including health care, transportation, an apprentice program, micro-academics, performance bonuses, and tuition reimbursement. 

Here’s another example: When Stirling Ultra Cold was at a pivotal point in its growth trajectory, it needed capital to continue. Advantage Capital’s investment, made in connection with the NMTC program, enabled the company to hire new employees, increase research and development, and support the rollout of a new product line. The company manufactures freezers that have become the sustainable choice for hospitals, research centers, universities, and corporate laboratories to store lab samples and other biomedical materials. It is a major employer helping to boost the local economy in rural Athens, Ohio.

RL: What have been some of the company’s biggest challenges, and how have you overcome them?

Stull: Our investment strategy is challenging. We go to communities and areas where traditional lenders are not necessarily active or interested, and we provide financing to the businesses and people who need it and are ready to seize it. We do that by being champions of small business — working hard to provide sophisticated and diverse options. And we ensure thoughtful fundraising and structuring are at the foundation of every fund and initiative — with a nationwide network of prominent investors who share our interest in positive impact. At the end of the day, we meet entrepreneurs and other innovators where they are and join them in their journey. It’s about sharing a common goal: growth.

RL: Why should other leaders in the field of investing follow suit?

Stull: We know capital changes lives. For many people, life is not getting any easier. Investing with intention and being motivated by meaningful impact can go together with successful investment outcomes and competitive returns. There is an opportunity — perhaps an obligation — to do both. Taking a double-bottom-line investment approach can lift people up, grow local economies, and have an enormous ripple effect across the country. Ensuring talented, experienced professionals are participating in that process is important. 

RL: What does the future of impact investing look like, and what role does Advantage Capital hope to play in it?

Stull: The future of impact investing is poised for major growth. Impact investing is a trillion-dollar industry and isn’t going away anytime soon. I am optimistic and believe more businesses are going to establish and accelerate strategies that do good while doing well. We will continue to do what we do best — funnel flexible financing to the places and people who need it and are ready to seize it. And we hope to continue to expand our scope as we grow our affordable housing and renewable energy business lines.

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