Fatter wallet at venture capital firm SBA infusion gives MMG more to bankroll minority entrepreneurs

A place to find financing

5 companies have approached for assistance

Minority business

December 14, 1998|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Baltimore-based MMG Ventures, an African-American-owned venture capital company for minority businesses, has pushed its fund to $17 million with a recent $7 million investment from the U.S. Small Business Administration.

If MMG uses the $7 million in the next five years, the SBA could triple its investment to $21 million, said Don Christensen, the SBA's associate administrator for investment in its Washington headquarters.

The SBA has up to $102 million to lend to MMG if its private capital grows, he said. "With this increased capacity, MMG should have a positive impact on those businesses that are looking for venture money," said O. J. Phillips, director of business development for the SBA's district office in Baltimore.

"It's not easy to get your hands on venture money," he said. "African-Americans and other minority entrepreneurs now have someplace to go to seek that type of financing."

In return for its investment, the SBA becomes a limited partner in MMG, along with the state of Maryland and the nonprofit Maryland Corp. for Enterprise Development.

"This fund is designed to help businesses create wealth instead of income," said Stanley W. Tucker, MMG president. "We want to take those business owners by the hand and lead them all the way to Wall Street."

The fund will primarily help businesses in the health care, telecommunications and information technology industries, he said.

Five companies have approached MMG for assistance from the fund. Three are in Maryland, and one each in New York and Texas, Tucker said. The fund is national and not restricted to Maryland, he said.

With the new investment, MMG is considered a mid-size company among the other 35 members of the National Association of Investment Companies, a Washington-based trade group for companies that invest in minority businesses, said Bill Kirk, the group's general counsel.

MMG Ventures is one of three funds managed by Tucker.

In 1981, he served as executive director of the Maryland Small Business Development Financing Authority, an agency that managed small-business loan programs under the state Department of Business and Economic Development.

In 1995, state legislation allowed Tucker to privatize the agency, and he developed it into the MSBDFA Management Group Inc., which has a $1.1 million contract to manage small-business loan programs for the state.

In 1996, MMG Ventures was established with a $9.7 investment from the state Department of Business and Economic Development. The company was licensed by the SBA, which allowed it to tap into its funding.

Tucker has been under fire lately for his business dealings, including using Maryland tax dollars to invest in out-of-state companies and making campaign contributions under MSBDFA Management, which receives funding from the state.

A legislative audit of Tucker's business is expected to be released this month.

Tucker said both practices are allowable because his companies are private.

In October, Tucker developed Community Development Ventures Inc., a venture capital fund that targets businesses in Baltimore's empowerment and enterprise zones.

It was established with an $8 million investment from organizations including the Ford Foundation, Prudential and Empower Baltimore.

"We have been working, and not dwelling on the audit," Tucker said of the report's pending release. "Our partners certainly aren't concerned with it.

"We've been remaining true to our mantra, 'Fielding dreams and creating a new reality,' " Tucker said.

Pub Date: 12/14/98

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