Michelle Foster glanced at the unclaimed nametags. Stormy weather had hurt attendance at the conference on funding alternatives for growing businesses, which was sponsored in part by Foster’s equity fund, Northwest Community Ventures (NCV). To follow its mandate to invest in rural Oregon and Washington, the fund depended on such outreach venues as the conference to attract and build trust with rural entrepreneurs unfamiliar with traditional venture capital. 

In early 2005 NCV had just over 8 years remaining on its 10-year charter. Nevertheless, Foster was already thinking about raising a follow-on fund. Like most venture-fund managers, she planned to start seeking investors for her next fund long before her current fund’s performance could be gauged. 

Foster was concerned whether she could attract institutional investors to NCV’s brand of socially responsible venture capital—especially if they could get better returns elsewhere at lower risk. Her primary challenge, however, was her deteriorating relationship with Eileen O’Brien, the founder of NCV’s high-profile, nonprofit parent organization.to coastal Oregon 10 years later, she knew she had found a place to begin a new sort of journey. 

Preparation Questions

1. Does the for-profit avenue chosen by Eileen O’Brien make sense for Grassroots Business Initiatives, Inc.? 

2. When is it OK to forgo economic profit in order to increase social returns? How can social returns be measured? Can social and environmental benefits be given a monetary value? 

3. What is the upside for Michelle Foster if NCV succeeds? What are the professional risks she faces? 

4. How should Foster position herself and her team prior to raising a follow-on fund?