Venture capital groups such as SJF Ventures offer small businesses a powerful chance to prosper.

By Geoff Williams

Every day, the men and women behind the wallets at SJF Ventures set out to prove that money isn’t the root of all evil. Like any good venture capitalist firm, SJF wants to become wildly wealthy, and fast, but their mission statement truly is a statement. The Durham, North Carolina, company invests in businesses across America that have $1 million or more in sales, and that have made their homes in unlikely, underserved locations, like formerly seedy neighborhoods in the inner city, or seed-strewn farmland in rural areas. According to managing director Rick Larson, SJF wants to help businesses with the potential to create quality jobs (higher than minimum wage, with benefits and opportunities for advancement), and whenever possible, they also like to find enterprises that are environmentally friendly.

In other words, if you’re an entrepreneur with dreams of making the world a better place, and are looking for equity capital of $500,000 to $5 million, then introductions are in order. Yes, these are the good guys.

Larson has a good example at the ready: he’s on his way to a board meeting at Ryla Teleservices Inc., a call center in Kennesaw, Georgia. “When we made the investment in Ryla, in 2002, a lot of people said, ‘What are you doing?’” recalls Larson. “All the call centers are in the Philippines or Bangladore.”

But it turned out to be money well-spent. Ryla is thriving, bringing in are ported $14 million in revenue in2006, and what’s more, the company is helping their community. They have200full-time employees receiving a full benefits package, 70 percent of which is paid for by the company. Ryla offers stock options to all of its employees, including the people who are on the phone. Not bad, considering this is a rapidly diminishing industry in America and known for offering lousy pay and few, if any, benefits.

But again, Ryla is profitable, stresses Larson, explaining, “Some entrepreneurs, when they make a pitch to us, lead with their environmental side, their redeeming side, and they forget that for their investors to be successful, people have to buy their product. So we’re most interested in strong business models. And that’s what’s going to make us—or any investor—interested in a company, more than where it’s located or how righteous that they can be.” But Larson adds that if a business model is formidable, then the righteous stuff that likely drove the entrepreneur to create the business will fall into place.

He offers another success story for SJF Ventures. Brightside Academy is a nearly care and education provider mostly based in Pittsburgh and Philadelphia. “They’re located in parts of the city where quality daycare isn’t available,” says Larson. “We like them because they’re a strong job creator, and there’s a real need in those neighbor-hoods for childcare that isn’t being met.” But Larson adds that while the Academy has “had their share of challenges over time,” the company is making money and growing, with 40 schools now open.

But for all the good that SJF is helping to create, the odds of linking up with them are slim. Of the approximately 1,200 to 1,500 businesses that send pitches to the investors annually, SJF invests in three or four companies. But Larson stresses, “Venture capital is only one form of capital, a very expensive form, and entrepreneurs need to realize that there are lots of other ways to capitalize on business. The key thing is not to get discouraged.”

And, according to Larson, many entrepreneurs doing their thing in the inner city are hard-wired to be persistent, optimistic, and ultimately, successful at finding a way to operate their businesses, no matter how cash strapped.  “Inner-city management teams tend to have a set of issues that they have to deal with everyday,” he says, “and that often makes them very good problem-solvers.”