MMG Ventures gets $2 million from Citigroup

Fund may qualify for additional money from Washington

Minority venture capital

June 22, 2000|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Baltimore-based MMG Ventures LP, an African-American-owned venture capital fund for minority businesses, added a $2 million investment yesterday from Citigroup Inc. - an amount that could attract additional money from the federal government that could bring the fund to about $35 million, fund officials said.

In return for its investment, Citigroup's Center for Community Development Enterprise becomes a limited partner in MMG.

Other investors include the Maryland Department of Business and Economic Development, the nonprofit Maryland Corp. for Enterprise Development and the U.S. Small Business Administration.

The fund is now closed to further investment, said Stanley W. Tucker, president and chief executive of Meridian Management Group Inc., which operates that fund and two others.

The newest investment will help MMG Ventures fill "a tremendous gap in the marketplace, especially in the urban community," Tucker said yesterday at a news conference at the World Trade Center that was attended by Lt. Gov. Kathleen Kennedy Townsend; Richard C. Mike Lewin, Maryland's secretary of business and economic development; and other state, local and banking officials.

Citigroup's investment brings the fund's private capital to $10 million, which qualifies it for additional investment money from the SBA.

Primarily, the fund will help businesses in the health care, telecommunications and information-technology industries. It expects to make about 20 investments ranging from $500,000 to $2 million.

So far, MMG has invested $12 million in nine companies. The fund is national and not restricted to Maryland, Tucker said.

Citigroup's investment is one of its first in a minority-controlled venture capital fund, officials said yesterday.

Citigroup's Center for Community Development Enterprise Equity Investment Program was formed in 1998 to help Citigroup lend and invest $115 billion over 10 years in low- and moderate-income communities and small businesses.

"Two million dollars in the world of venture capital is not a lot of money, but the investment is significant because it demonstrates our real interest in funding African-American fund managers," said David Davenport, an investment officer for the Citigroup investment program. "But the only color that really matters is green, and we expect MMG to make money from its investments."

Tucker was 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 1981.

In 1995, state legislation allowed him to take the agency private, 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.

MMG Ventures was established in 1996 with a $9.7 investment from the state Department of Business and Economic Development.

In 1998, 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.

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