Fellowship Spotlight: Partners In Equity
“We invest the essential equity required to close the gap between a dream deferred and closed deal,” says Wilson Lester, co-founder and general partner at Partners in Equity, “This fund has a strategic focus elevating the opportunity for Black proprietors to own where they operate, and participate in the commercial development of their communities.” With just 3% of commercial real estate owned by Black people, and projections that Black median household wealth is on track to reach $0 by 2053, the patient capital that Partners in Equity invests is urgent and vital.
The PIE Fund
Alongside his colleagues Talib Graves-Manns and Napoleon Wallace, Lester manages the Partners in Equity Fund — also known as the PIE Fund. “We’re creating more significant opportunities for Black and Brown people to own the properties where they operate, and to put banks in a position where they can say yes, given that the business owner has a strong position in equity to bring to their transactions. We’re working to create transferable wealth that promotes generational wealth.”
“Fighting displacement as well and helping business owners create wealth is what we work toward,” Graves-Manns says. “When you look across businesses in communities, and can quickly determine that many business services or solutions are on par if not not better than their peers, but yet that business is underfunded, that is a problem. That’s what keeps us up at night. The purpose of Partners in Equity is to create more financial opportunities for our business owners focused on owning commercial real estate to grow their business enterprise. We exist to make sure they’re getting the capital they need to win. Our capital shows up to level the playing field between those business owners and their peers.”
PIE connects main street entrepreneurs with patient equity to increase the number of Black and Brown businesses that own the commercial real estate where their companies operate. “Our firm was founded in North Carolina,” Graves-Manns explains. “And our new fund serves the Black Belt, a term the team uses to describe areas in the United States where there are high concentrations of Black people. So that’s the South and mid-Atlantic.”
They provide equity-based down payment assistance that allows businesses to acquire new or preserve existing commercial real estate. The fund invests anywhere from $100k to $1M into property acquisition, which generally makes up 15% of the down payment required to purchase commercial properties, translating to total acquisitions anywhere from $450k up to $4.5M. With this strategy, the PIE team expects to impact 25 to 30 firms with the PIE Fund.
Set Apart from the Crowd
“We don't see other firms approaching Commercial Real Estate (CRE) Private Equity Investing the way we are doing it,” Graves-Manns says, lifting up his team’s unique catalytic investment concept. “When people think of private equity and commercial real estate, they tend to think about industrial, multi-family, mixed-use and office in a very traditional industry way. We understand the market opportunity more broadly which incorporates traditional investment opportunities as well as non-traditional CRE investments.
Creating access to private equity in Black and Brown community corridors is particularly powerful because of the ways that these entrepreneurial ecosystems have been systemically left out of commercial and private finance. “What we’re essentially doing,” Wilson clarifies, “is identifying a new asset class that provides a significant opportunity to direct capital into stable and quality investments, particularly in markets that are underinvested, where we can acquire property alongside the business owner at a below-market value resulting in outsized alpha.”
The amount of capital allocated to expand this new market opportunity is nil which allows PIE’s approach to remain novel. It continues to demonstrate among a cadre of only a few asset managers rationalizing black and brown commercial ownership for asset allocators through performance and returns. Given that there continues to be considerable underinvestment, it will take a massive amount of investment to fill the void.
“In that regard,” in Wilson’s words, “we are glad to lead, prove market value, and troubleshoot to allow more capital to flow into the opportunity gap for ownership in diverse communities. This is a market that is expansive enough that would-be competitors can thrive alongside PIE as partners in the capital stack. I think that puts us in a good position to demonstrate and communicate what we’re doing as a benchmark for investing.”
A Legacy of Black Entrepreneurship
Speaking clearly to the core goal underlying the work of the PIE Fund, Graves-Manns says, “I want to enable the business owners we invest in to have a much stronger financial fate as a result of them having this inflection point of capital to secure and own real estate.”
He goes on to share some of the context that led him to this clarity. “I’m a fourth-generation entrepreneur on both the matriarchal and patriarchal sides of my family,” Graves-Manns shares, pointing to the lineage of his predisposition for entrepreneurship. “Probably 99% of the revenue that’s come in on both sides of our family over the years has come through business transactions with other diverse customers and businesses. I’m one of the few people who’s operated in an environment where the currency is exchanged with each other.”
In addition to this exposure to the value of keeping money in the Black community, Graves-Manns also inherited a connection to real estate. “Being a second-generation real estate broker, I’ve learned a lot from my mother on the nature of transactions, and valuing properties. Her grandfather procured over 250 acres in North Carolina which our family still owns. Through familiar lineage & responsibility, I’m rooted in this work.”
But it’s not only the successes of Graves-Manns’ predecessors relative to property and ownership that have motivated his commitment to supporting Black people in real estate. “I’ve seen times when my family either chose to not buy a piece of real estate or they were forced to sell a piece of real estate that’s now worth a pretty penny.” His downtown Philadelphia childhood home is a prime example of this dynamic. “They sold for approximately $130k because they needed to relocate their business,” he shares. “Now that property is worth $1.2M. If our family still had that asset, I would be in a different financial position – thus have the ability to leverage familiar assets as I go on to grow/expand our business interest.”
Lester has a comparable motivating story, as his grandfather owned several properties that he had to sell before being able to pass them down to his children for the benefit of his family. “I’m determined to utilize what I’ve learned and experienced,” he reflects, “to ensure that people that look like me and those adjacent to my community have the opportunity to own an asset and understand how to maintain it to build generational wealth and social capital.”
Joining Forces to Tackle the Problem
All three PIE Fund partners had years of success in their respective careers before coming together to collaborate on this work. Wallace was formerly a C-Suite executive at Self-Help Credit Union, the country’s largest community development financial institution (CDFI), and also served as Deputy Secretary of Commerce for the state of North Carolina; investment officer at Kresge; and investment banker at Wells Fargo.
Graves-Manns, who’s a former Google Entrepreneur-in-Residence with a background in corporate America, built multiple community-serving entrepreneur support organizations, including Black Wall Street Homecoming, which attracts tech firms, startups, main street businesses, and investors, annually to Durham, North Carolina; and Knox Street Studios entrepreneurship and innovation center, which he leads in North Carolina.
Lester has over a decade of entrepreneurial experience, has managed federal programs for the department of education, and led and exponentially grew the value of Piedmont Business Capital CDFI, increasing the asset size tenfold in a five-year period.
At the height of his work in community finance, Lester had an epiphany. “At the CDFI, we were putting money into the community,” he acknowledges, “but before that money could be effective in the businesses we loaned it to, they had to repay that debt. And I felt that wasn’t very catalytic.” Private equity seemed like a more promising route for the impact Lester wanted to create. The kind of promise that creates wealth, and is non-extractive.
With a sturdy foundation of mutual respect and a shared vision of investing in Black communities, the three men started coming together to have informal conversations about how they might collaborate to expand their impact, which led to the launch of Partners in Equity.
“Between us,” Lester points out, “we have a residential portfolio of about 15 doors that are either new construction or redeveloped leased property that we own as individuals. We also own two commercial properties operating in Greensboro and Durham, and we have over 15 years of experience either originating, managing, closing, or selling deals in commercial and residential real estate as well as a combined 30 years of underwriting commercial real estate and small business loan transactions.”
All of this experience has helped the PIE Fund team to understand the nuances that businesses encounter and positioned them to provide nuanced support as well. “What really changes a lender’s mind,” Lester shares, “is de-risking their position in a transaction, and the stronger a business owner can show up capital-wise, the better the chance of getting their loan closed.”
All in the Name: Partners in Equity
While their model invests patient affordable equity, PIE Fund functions as a true partner to the people they’re investing in. “We’re actually working alongside the owner, and have interests in seeing the property do well in the same way the business owner would,” says Wilson.
To this end, they support the identification of additional resources, including technical assistance and additional capital, to help business owners’ ability to be as successful as possible. “As partners,” Wilson adds, “we can step in, start a conversation, and figure out how to right-size the dynamic for the business owner or determine the next best step for the property to avoid putting the business owner and the property in a detrimental position.”
Participating in the VC Include Fellowship
The PIE Fund partners don’t take lightly what they’ve gained from the VC Include Fellowship. Graves-Manns shares, “I’m certain that our proximity to VC Include is going to help us close some of the relationships we’ve been working to build for the past year and a half. It was really good to be in the room physically at the Include Impact Conference in DC as well as for the VC Include fund manager showcase,” he adds, “to reinforce with some potential investors and partners that we’re the real deal.”
Lester adds, “It was also good for us to have the opportunity to engage other GPs, hear their stories, get their feedback, and really understand that we’re not in this alone, because this work can be very siloed.” He underscores the dynamic of so many fund managers of color feeling disconnected because of lack of representation in the field.
We’re honored to hold spaces that can remedy the isolation that emerging fund managers of color experience in the world of VC while also accelerating their ability to deliver on their missions. We look forward to continuing to witness the growth and impact that the PIE Fund creates.
