Catalytic capital: Mission-aligned financing in action
An impact-focused funder provides the flexibility social enterprises need to grow without compromise
Social enterprises on the cusp of their next level of growth, impact, or both often face unappealing choices when seeking the financing they need to seize opportunities: equity options that will dilute not only ownership but also the mission; lending products designed for boxes they don’t fit into; an unusual operating model that takes work to understand.
In this situation, an impact-focused funder can be the ideal source of catalytic capital, providing flexible, customized financing built on deep learning about what the enterprise is trying to accomplish and what they need to do it.
The following three examples, drawn from the experiences of current and former RSF Social Finance borrowers, illustrate how mission-aligned capital provides the right kind of fuel at the right time without requiring compromises.
Kinvolved: Growth capital supports scaling to acquisition stage
Miriam Altman-Reyes and Alexandra Meis founded Kinvolved in 2013 because they were passionate about a mission: making sure kids showed up for school. They developed KiNVO, a software platform that sends caregivers an SMS text message (instantly translated into the family’s preferred language) when a student is absent. The idea caught on, and by 2018 Kinvolved was serving school districts in seven states and Washington, D.C. But the founders wanted to reach more families and students, and they needed working capital to cushion cash-flow variability and enable risk-taking to drive growth.
Catalytic capital: Kinvolved was pre-profit at that point and had annual revenues of less than $1 million. The company was too small to qualify for RSF’s social enterprise lending program, but the lending team loved its mission and potential. RSF issued a $200,000 line of credit from its Women’s Capital Collaborative, a philanthropic fund that provides growth capital to women entrepreneurs when they need it most.
Next-level growth and impact: The credit line became a lifeline during the pandemic, and Kinvolved became a lifeline for schools, leading to strong client retention and growth. That captured the attention of K-12 software leader PowerSchool, which acquired Kinvolved in February 2022, allowing the company to significantly expand its scope. The early-stage capital was key. “Having that extra layer of flexibility when we were a small and really cash-strapped business,” Altman-Reyes says, “enabled us to not only breathe a little easier but also service districts and pursue pathways that would have been out of reach.”
Boldr: Working capital supports commitment to sustainable growth and impact
Ethical outsourcing company Boldr aims to interrupt cycles of human exploitation and economic disparity by boosting access to digital training opportunities in underserved communities, creating career opportunities, and building high-performing global teams. Founded in 2016, Boldr took off and by 2021 had entered an intense period of expansion, increasing its headcount over 200 percent and adding new offices in Mexico, South Africa, and Canada to its established operations in the U.S. and the Philippines.
Expenses tied to this rapid growth led the “proudly self-funded” company to seek external capital for the first time, says David Sudolsky, Boldr’s CEO and founder.
Catalytic capital: “We considered all avenues, including multiple debt providers, private equity, and venture capital,” says Sudolsky. Boldr, a Certified B Corp, chose RSF for its values alignment and opened a $500,000 asset-based line of credit in November 2021. That allowed the company to support its expanding operations while taking a moment to breathe and reassess its options.
“Boldr went through a transformational experience in 2022 where we stopped pursuing a growth-at-all-costs strategy,” says Sudolsky. “Our business is people, and we have a deep passion for doing what we are doing in a way that continues to put our team members, their communities, and our clients first. Reflecting on the 140 percent growth rate over the previous five years, we recognized that continuing at this pace would pose a threat to our ability to maintain the level of quality to our clients and support to our team members that will make us proud.”
While in the final stages of signing a deal with a private equity firm, Sudolsky took time to reflect and get perspective. “After asking some questions and seeking to understand what success looks like for a private equity firm in a deal such as this, it became clear that shareholder return would at best influence and most likely drive strategic decisions in the longer term. This would undeniably pose a threat to our ability to continue challenging this industry,” he says.
“Because we had this capital on hand, we were able to make the harder decision to turn down that investment and instead focus our energy on building a self-sustaining business.”
Next-level growth and impact: Boldr continues to grow, though not as quickly, and recently increased its RSF credit line to $750,000. The capital ensures that the company can build a strong foundation for scale as well as advance its mission to change the way outsourcing is done.
Boldr champions living wage initiatives in the markets where it operates and has committed to ensuring that 100 percent of its team members earn at least a living wage by the end of 2023. In addition, it is partnering with the Good Work Foundation to build a training and job readiness center in the rural South African town of Hazyview, which is heavily dependent on tourism and farming. The partnership is designed to create more livelihood options while bridging the community to 21st-century skills. The initiative follows Impact Sourcing projects launched in the previous year with local partners in Cape Town, South Africa, and the Philippines.
Wildlife Corridors: A bridge loan protects 400 acres
Wildlife Corridors LLC, a collaborating organization in Borderlands Restoration Network, works to protect critical migration corridors for bobcats, jaguars, and other animals in the Arizona-Sonora border region. The organization believes that while nonprofits will remain at the core of most land conservation efforts, the magnitude of needs requires collaboration between nonprofit, limited-profit, and for-profit organizations that can bring in diverse income streams. Wildlife Corridors seeks to facilitate those partnerships.
In 2021 Wildlife Corridors had a unique opportunity to buy and protect land identified by Northern Arizona University research as an essential wildlife corridor. The organization was awaiting a grant for over $1 million from the Forest Legacy Program, and while it might have been able to pull together cash on hand to make the purchase on a tight timeline, doing so would have limited its ability to protect other critical land from being sold to developers.
Catalytic capital: RSF stepped up with a $715,000 bridge loan — an unusual type of debt for RSF, but the innovative model and mission alignment with RSF’s climate and environment focus area made a compelling case. “It was critical,” says Ron Pulliam, founder of Borderlands Restoration Network and a Wildlife Corridors managing member. “RSF was a great partner at the right time. The loan took us from 1,500 to 1,900 acres under protection.”
Next-level growth and impact: Wildlife Corridors has now purchased almost 2,000 acres, and 1,800 are in conservation easements. This land not only supports wildlife; it also will host part of the Arizona Trail, which brings economically important ecotourism to Santa Cruz County, and it operates a paid internship program that engages culturally diverse youth living on the border in hands-on restoration projects.
The best option for funding social enterprise growth may not be the most obvious one, and it’s worth spending time searching for the right fit and building a relationship that allows quick and creative action when it’s needed.
