Wilkerson '92 finds new opportunities in private-equity investing
years of experience and a rÈsumÈ that includes raising her
own fund, Kathleen Wilkerson '92 is no novice in the rough-and-tumble
world of private equity investing. But her latest venture
has her mapping terrain new to her and uncharted by most of
the venture capital community too.
managing partner of Next Frontier Capital, she's helping to
build a fund that will invest in businesses in underserved
communities throughout Illinois and its border areas. Enterprises
owned by minorities or women are particularly attractive to
the fund managers.
good business strategy with an agenda that enhances social
good feels right and makes sense, says Wilkerson, who enrolled
at the Kellogg School at age 34, with a professional background
that already included starting a bank and taking it public.
an untapped market," she says, pointing out that many low-
and moderate-income areas already have an established infrastructure
for success: a ready work force and good transportation systems.
areas have been denied access to capital," she adds. "That's
the whole point of our name --- Next Frontier Capital. This
is the next great area for private-equity investing. Lots
of areas have been overmined. This is one of the areas left
where there is real opportunity."
cusp of her 50th birthday in 2003, Wilkerson was looking for
new ways to tap her professional experience and put her MBA
to use when she attended a Kellogg School conference on finding
for-profit opportunities in the nonprofit sector. There, she
met the executive director of Chicago Community Ventures,
the nonprofit business development organization affiliated
with Next Frontier Capital that has contributed $1 million
of capital to the fund.
Wilkerson was discussing a job opportunity in an area she
previously hadn't even realized existed.
by funds such as Pacific Community Ventures, which spurred
initial investment in Silicon Valley, and Boston Community
Ventures on the East Coast, Next Frontier Capital will close
on $10 million of committed capital later this summer and
begin making its first investments shortly thereafter. Fund
managers already have begun identifying promising companies
in which to invest --- firms that are located in low- to moderate-income
areas and which are most resistant to foreign competition.
might include value-added manufacturing companies, commercial
services and outsourcing firms, food processing and distribution
operations and media focused on serving minority communities.
be companies that take a long-term view of their role in the
community and reward workers for a job well done.
businesses have gotten in trouble recently for taking a short-term
focus," Wilkerson says. "Treating employees well by providing
a living wage and medical benefits makes sense. Allowing employees
to share in the profits makes sense. Being socially responsible
makes sense. All of these things make a business sustainable."
investors, Wilkerson says, like the idea that their capital
will aid underserved communities, but are primarily profit-driven.
Most are institutional investors with a duty to return money
is confident in the fund's ability to deliver, citing a study
by the Ewing Marion Kauffman Foundation that found that private
equity firms focused on underserved areas outperformed private
equity firms as a whole.
another Kauffman Foundation study to prove she and the fund's
two other managing partners are the right people for the job.
Few women and minorities make decisions about who receives
venture capital, although diversity would ensure greater ability
to find new deals and relate to businesspeople from all walks
Frontier's team of three managers, she says, has the required
diversity for success.
adds that her latest career move "just felt right." If things
go as she plans, it will be the last stop on a successful
believe in this," she says. "I believe the way you achieve
economic development is through private-equity investing.
A growing business is going to have to attract additional
capital. But there's no community development if a business
is not sustainable and can't return a market return."