Phila. Gets Little Return on Minority Business Investments

Claudia Vargas, Philly, April 11, 2016

On paper it seemed pretty simple.

The state gave a newly created venture capital fund $1.5 million to invest in small minority businesses in Philadelphia. Those businesses would share their profits with the fund and the money could be used to invest in more businesses.

But 20 years and several lawsuits later, taxpayers lost on their bet. Of $1.25 million invested in 14 businesses between 2004 and 2006, the city recovered only $225,000. Nine of the businesses paid nothing back.

The administrator of the fund, Minority Venture Partners (MVP), blamed the losses on bad economic conditions. But those who have tried to collect the money blame a lack of oversight.

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Philadelphia Commercial Development Corporation (PCDC), the quasi-government agency that helped create MVP, settled with the last of the businesses–Z&Z Distributors–on March 29. {snip}

Z&Z is at least still in business. Several others are shuttered and the owners of two went to prison over other financial deals.

“These were businesses that weren’t very sophisticated,” city Inspector General Amy Kurland said.

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