Anne Richie, the Founder and Managing Director of The Mezzanine Fund, is on a mission to revolutionize capital allocation. With over 25 years of experience in finance, she has successfully deployed capital in venture capital and corporate restructuring, honing a deep understanding of capital and industry exposure.
The Mezzanine Fund, under her leadership, disrupts traditional capital pathways with disciplined investment strategies and rigorous due diligence to empower women and BIPOC-owned lower middle-market companies while offering a compelling alternative to venture capital.
This interview sheds light on her transformative approach to capital and her commitment to empowering historically underfunded businesses.
What inspired you to start The Mezzanine Fund?
In the particular area of banking where I spent a good part of my career – debt restructurings and workouts – I never encountered diverse owners. After banking, I worked with tech start-ups and small businesses and witnessed the underfunded potential of women and people of color. I decided that I had to use my skills to make sure this potential was not lost.
In your work as a capital activist, what key factors do you consider when evaluating potential investments?
It may sound cliché, but I look first to the skills, experience, and character of the owners and their team and then to the feasibility of the growth plan and strategy. I have seen phenomenal pivots from entrepreneurs – creativity, drive, and integrity are what get investments repaid when things don’t go as planned.
What industries or types of businesses are particularly well-suited for mezzanine financing or debt financing as opposed to traditional venture capital?
Generally, with debt capital, there must be positive cash flow or a quick path to positive cash flow since the loans are usually repaid over the life of the loan. Mezzanine debt is particularly well-suited for supply chain companies that sell services and products to other businesses as they tend to be scaled and profitable, with a reliable customer base and established markets as compared to businesses that sell directly to consumers.
We are seeing a lot of opportunities in healthcare, logistics, light manufacturing, and business services, though we do not have industry restrictions.
Can you share some insights into the initiatives you’re involved in to change the landscape of investment fund management and support Black entrepreneurship?
The Mezzanine Fund is a founding member of MAP Labs, an initiative with our chamber of commerce that brings together lawyers, accountants, funders, and supplier diversity professionals to help diverse-owned businesses grow by merger, acquisition, and partnership transactions.
This lab will provide the networks, expertise, and relationships that are critical to growing larger businesses. I am also working on an initiative to raise awareness of the opportunities to grow the number of middle-market companies through the acquisition of businesses with no succession plans.
On the fund manager side, I am involved in IDiF, Black Women in Asset Management, and a newly formed group of Black women GPs, all of which aim to increase the number of Black women in the fund management industry and change the landscape of capital allocation.
Lastly, I attempt to increase the fund professional pipeline by teaching finance at the university level and participating in financial literacy training.
What advice would you give to founders who are seeking capital for their businesses?
(1) Know your numbers even if you have a CFO or Controller, (2) be sure to match the type of capital you seek to your specific need, (3) factor in more capital and more time than you originally may think you need, (4) be creative in seeking more support for customers for growth (i.e., faster payment terms), and (5) build relationships with banks and other funders before you need them.
