Jean Case: Durham can be a leader in impact investing

When Jean Case, the CEO of the Case Foundation and wife of AOL co-founder Steve Case, came to Duke University this week to speak to students, she didn’t confine herself to the neo-Gothic walls of Duke’s West Campus. Rather she spent a majority of the day, exploring the City of Durham for opportunities and ideas for her family’s foundation.

The Case Foundation is one of the leading advocates for impact investing — a type of investing that looks for financial returns as well as positive social returns. That could mean anything from investing in clean energy firms to companies that are headed by minority CEOs.

Case said she sees great potential in Durham to be the a leader in that movement. Before her talk at Duke, she said she visited the downtown tech incubator American Underground, the American Tobacco Campus, the Forward Cities council and projects that Self-Help Credit Union is working on in North-East Central Durham, among others.

“In one of the conversations we had with community leaders, one of the guys said this community really has the potential to become a hub of impact investing in the nation,” she said. “I think he’s right about that. It doesn’t necessarily mean that all impact investing will happen here, but it could be a real leader as a community in impact investing. If you look across this community and where the investments are going and how people are thinking about it, it's very impact focused and that was impressive to see.”

Specifically, Case had positive words to say about the downtown tech incubator American Underground for its efforts in creating a diverse ecosystem of entrepreneurs.

A part of impact investing that Case sees as critical is inclusivity, she said, adding that venture capitalists have done poorly in putting money into companies led by minorities. Last year female-backed companies received only 10 percent of all venture capital funding, and it was an even smaller portion of the pie for African American-led companies, which got 1 percent of venture funding.

“Diverse firms outperform by 35 percent non-diverse-led firms,” Case said. “... Entrepreneurs are problem solvers, so if we bring a new mix of people who have faced different problems, it means they are going to bring different solutions and innovations to the table we haven't seen.”

She added that American Underground has “great data” when it comes to inclusivity.

American Underground saw a large increase in the number of companies that were female and/or minority-led in 2016, according to its annual report. More than 48 percent of American Underground companies are now female and/or minority led, which represented a 30 percent increase from 2015. Of the 257 American Underground-based companies, 28.4 percent are minority led and 29.1 percent are female led.

The Case family fortune — valued at more than $1 billion by Forbes magazine — has been active at American Underground in the past. Steve Case has invested a combined $300,000 in Windsor Circle, Archive Social and Mati Energy in recent years — all companies with connections to American Underground.

Doug Speight, the CODE2040 entrepreneur in residence at American Underground, was one of the many people Case met with during her visit. His role at American Underground is to spur minority participation in the startup community.

“The Case Foundation was looking at Durham because our profile mimics what the country is going to look like,” said Speight, noting the diverse demographics that have existed in the city for generations.

He pointed to programs such as the Google for Entrepreneurs Exchange Program for Black Founders and Black Wall Street Homecoming as being the chief examples of the incubator’s diverse focus.

“Impact investing was what was happening here at Black Wall Street’s peak,” Speight said, noting the rise in African-American owned businesses in Durham in the early 20th Century. “Jean and the Case Foundation are hoping to create that same sort of environment that existed then [through the foundation’s work]. There is a great opportunity to do that now through the tech economy with impact investing.”

Part of the Case Foundation’s mission is to shine a light on what is happening in entrepreneurial hotbeds outside of New York City and Silicon Valley, where most investment money flows to currently. But Case was also impressed by how much homegrown capital exists in Durham already.

“When we come to a community, part of what we are doing is a purposeful study and understanding of what is happening on the ground, so we can leave and use a megaphone to tell the world what is going on there,” she said. “... Do communities need investments from others places? They do, but what we saw [in Durham] and we see in a lot of communities is that they’re home growing some of that investment capital.

“For me that is the healthiest form of investing.”

One area that was not broached while Case visited American Underground was the impact that House Bill 2 has had on North Carolina’s startup community and its ability to attract outside investment.

But the bill was enough of a concern for the Cases last year that Steve Case postponed a scheduled trip to Durham. Google Ventures also said it would not invest in the state until the bill was repealed around that same time.

Jean Case said that the bill was indeed affecting North Carolina’s ability to attract investment, even though the state’s startup communities have shown so much promise.

“We think it has impacted [investment] based on who we've talked to and what we've heard,” she said. “It has scared away economic activity. There's just no question about it. Even if you don't want to take a political stand on how you feel about it, you can look at the data and the data is pretty clear that there was lost economic activity.”

Zachery Eanes: 919-419-6684, @zeanes