Innovación Fund 1

Innovación Fund is managed by Cielo CDVC (fund GP) a JV between Cielo Private Equity (www.cieloprivatequityfunds.com) and EDCO Ventures (www.edcoonline.org).

EDCO is a non-profit technology accelerator focused on developing economically distressed communities and targeting under-represented founders in high growth companies including: Women, Latinos, African-Americans. Complementing EDCO in the General Partnership is Cielo Private Equity, a firm whose principals have managed over $2.5B in capital across various industries and asset classes including: energy, real estate, venture capital, and angel investing.

Innovación Fund 1 is structured as a Community Development Venture Capital (CDVC) fund, a high-impact development-focused fund on the Texas Border and South Texas region. The target area contains 17 of the Top 100 poorest counties in the United States. Fifty percent of the children in this region live in poverty.

However, Texas is a place of tremendous opportunity. The state has created 40% of all new jobs in the U.S. since the Great Recession of 2008. EDCO Ventures has been developing a pipeline of high-growth companies ready for venture capital investment. These hidden gems, passed over by other US and Texas-based VC firms who lack local knowledge, relationships and the experience to work effectively in the region, are ready to provide a financial return to investors and serve as instruments of community wealth creation, shared prosperity, and inclusion.

Financial description

Innovación plans to invest its funds in companies as follows: 10%-Pre-Revenue Stage, 10%-Early Stage and 80%-Growth Stage Investment.
At least half of the fund’s portfolio investments will be co-investments with other investors. In addition, the fund will maintain ten percent (10%) of its assets as a cash reserve, and to deploy the balance in the first two (2-3) years following the Initial Closing of the fund.
Innovación will utilize an Exit by Cash Flow (ECF) investment methodology, meaning that the fund will seek to recover the entire principal in a 5-10 year time frame beginning in year 1. The ECF model substantially reduces risk for LP's. The profits will be generated from a successful exit. Innovación expects the exit structures to mirror that of the Community Development Venture Capital Community including: 50% External Sale, 30% Management Leveraged Buy Out, and 20% ESOP, IPO, or other exit type.
However, considering the fund's goals of promoting shared prosperity and community development, Innovación will favor management buybacks as a way to preserve company ownership in the hands of founders, employees, and the communities.