The 22 Fund, a Los Angeles-based early-growth venture capital fund, secured $5 million from BMO and $3 million from City National to back export-oriented manufacturing tech businesses that have a focus on creating high-wage, clean jobs in low- and middle-income US communities. The commitments, via the banks’ Community Reinvestment Act initiatives, brings The 22 Fund’s fundraising to $42 million.
The 22 Fund aims to provide equity, debt and revenue-based financing to diverse-led businesses that are often overlooked by venture capital tech investors. It has backed five companies to date, including OpConnect, a Portland-based EV charging infrastructure provider that trains and hires local talent, and Nature Coatings, a Las Vegas-based biochemicals company that converts waste materials into zero-carbon materials.
“The CRA is one of the most powerful tools we have for creating equitable economic outcomes in this country,” said The 22 Fund’s Tracy Gray.
Inclusive economy
BMO and City National made the investments via their mandates under the CRA, the 1977 law designed to spur banks to serve the needs of low-income communities where they operate. “Our investment in The 22 Fund aligns with our CRA strategy to close funding gaps, create good jobs and empower communities to thrive,” said BMO’s Carl Jenkins.
Most CRA funding has gone to affordable housing and small business lending. The 22 Fund channels some of that capital to diverse founders working on sustainable solutions and inclusive economic development.
“We’re proud to be among a small but growing number of venture firms using CRA capital to support diverse founders and scale climate technology,” Gray said.
Federal bank regulatory agencies last week formally moved to rescind a 2023 update to the CRA to account for online banking and expand the low- and moderate-income areas eligible for CRA funding.
