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Chandler Jones: “Not to sound cliché, but we need to see passion!”

Like any successful relationship, honesty and integrity are important building blocks of any successful investment. We need to be able to trust our portfolio companies as partners. We’ve had instances where information sharing becomes opaque after the investment is made. It might be due to stress, self-preservation, or embarrassment. This only strains the relationship and […]

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Like any successful relationship, honesty and integrity are important building blocks of any successful investment. We need to be able to trust our portfolio companies as partners. We’ve had instances where information sharing becomes opaque after the investment is made. It might be due to stress, self-preservation, or embarrassment. This only strains the relationship and makes it harder to help. Therefore, we need to feel confident that the management team will be honest and uphold the principles established at early in the investment period.


I had the pleasure of interviewing Chandler Jones. Chandler is Principal of CEI Ventures, Inc. which finances high impact, growth-oriented companies located in targeted communities in Maine and the Northeast, investing in a variety of sectors and stages with investment amounts ranging of 250,000 dollars to 2 million dollars. Working with partner funds, CEI Ventures can also coordinate and/or lead larger financings with investors sharing their outlook and social impact criteria. Since 1996, CEI Ventures has raised 4 funds and invested in over 60 high growth companies. Chandler received a Bachelor of Arts in psychology from St. Michael’s College and an MBA from the University of Southern Maine with a concentration in finance.


Thank you so much for doing this with us! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?

I’m a Maine native. My Dad ran a family business and my brother and uncles are lobstermen. As a child I saw the challenges and sacrifices of running a small business and fragility of Maine’s natural resources. Both of my parent’s families have deep roots here, so after attending college in Vermont, and spending four years in Colorado my wife (then girlfriend) decided to move back east. Maine was at the top of our list for places to move.

We moved back in August of 2008, just in time to watch Leman Brothers file for bankruptcy and the stock market collapse. Being a rural state, Maine lacked many of career growth opportunities found in more urban areas. This, coupled with the fact that many businesses were clinging to survival, made for a challenging job search for me. It was a humbling experience but got me interested in economic and community development.

I’m incredibly passionate about Maine and know how resourceful and resilient we are. After working in personal finance for a couple years I decided to go to business school and refocus. By this point, I had been following the Maine-based Community Development Financial Institution Coastal Enterprises (known as CEI) for several years. When an internship popped up with their venture capital subsidiary CEI Ventures I jumped on it!

As part of a CDFI, CEI Ventures is part of a select segment of mission driven venture capital firms that isn’t well known: community development venture capital (CDVC) investors. CDVC funds are charged with providing equity capital to businesses in underinvested markets, seeking market-rate financial returns, as well as the creation of good jobs, wealth, and entrepreneurial capacity.

That was the work for me; I’ve been at CEI ever since!

Can you share a story with us about the most humorous mistake you made when you were first starting? What lesson or take-away did you learn from that?

When I first started as an intern at CEI Ventures, I got stuck in an early morning meeting with the CEO of a company we were evaluating for an investment. Since the meeting was local and early, my boss and I took separate cars. My boss got held up and I needed to proceed without him. I was in over my head. Business school teaches you a lot, but there is a terminology and nuance that is unique to venture capital investing. I’m sure my face was beet red as I stumbled through a discussion about deal terms and this company’s industry — a field I knew nothing about. At last, my boss showed up. I could see the relief in the CEO’s face. That night I spent the evening buried in textbooks researching what I’d been talking about!

While I’m constantly trying to learn more about the industries we invest in, I will never have all the answers. We rely on the teams we invest in to bring that knowledge and experience. Working in venture capital is a lifelong learning opportunity and it’s ok to admit what you don’t know. Also, sometimes asking basic questions can give you a sense for how well the investee CEO can articulate the product, market, or value proposition.

Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Are there takeaways or lessons that others can learn from that?

CEI Ventures invested in a company that found a way to put vitamin supplements for horses into customized, easy to administer packages (yes, you read that right). The company was unable to secure investment from larger VC’s because it was out of the mainstream, had a smallish market, and was raising a small round of investment. The company became an enormous success and, as CEI Ventures has a commitment to investing in impact entrepreneurs the growth was especially meaningful. The business eventually employed nearly 400 people, many of them immigrants, who were provided transportation and competitive benefits.

The takeaway is that conventional wisdom is not always right. It’s easy to question, “why hasn’t anyone invested in this?” But, sometimes you need to take a chance.

None of us are able to achieve success without some help along the way. Is there a particular person or mentor to whom you are grateful who helped get you to where you are? Can you share a story about that?

I’ve been lucky to work with some incredible people, both at CEI and through our portfolio investments. The eco-system of impact entrepreneurs and investors is very collaborative and supportive, particularly in Maine. I’ve learned a lot through my day-to day-experiences which has helped to shape my approach to impact investing. However, two people have had the largest impact on my career.

First, Nat Henshaw, President of CEI Ventures, who hired me as an intern. Then, Nat gave be a job as an Associate and has continued advocate for me along the way. He taught the importance of when to be skeptical and how to ask the right questions, all the while keeping my eye on the dual purpose of these impact investments: social impact and financial return. Nat’s guidance has helped to motivate me to be better at my job.

Next, Ron Phillips, founder of CEI, is a pioneer in community development finance. Ron led CEI for nearly 40 years and remains incredibly passionate about economic and social justice and environmental sustainability — very inspiring! He had the vision to understand that conventional finance could bend to support social justice through economic independence and ultimately shared prosperity. That vision allowed for a CDFI to make venture capital investments and utilize other financial tools.

You have been blessed with great success in a career path that many have attempted, but eventually gave up on. Do you have any words of advice for others who may want to embark on this career path but are afraid of the prospect of failure?

Whether starting a business or raising a fund, you should know the risks and that failure is possibility. Fortunately, there are usually a number of smaller individual failures that lead up to ultimate failure. We need to account for these small failures, learn from them, and evolve. When under pressure people often overlook the simple exercise of evaluating what went wrong. So be honest with yourself, check in regularly to see what’s working and what hasn’t, and surround yourself with good people who believe in you but are not afraid t.

Venture capital can be a very powerful tool in the right context. However, it favors a certain business profile. As social impact investors, it’s easy to get seduced by a story or a mission that is compelling and impactful. However, some of these companies just don’t fit the VC mold. For instance, some entrepreneurs don’t fully understand the dilutionary consequence or protective provisions associated with a VC investment. Maybe they want to focus on profitability, slower growth, or transfer the business to their children someday. In this case, debt may be a more appropriate option. It’s our job as investors to be aware of that and provide advice to help an entrepreneur find the right type of financing.

Ok, thank you for that. Let’s now jump to the main part of our discussion. The United States is currently facing a very important self-reckoning about race, diversity, equality and inclusion. This is of course a huge topic. But briefly, can you share a few things that need to be done on a broader societal level to expand VC opportunities for women, minorities, and people of color?

One of the first things the VC industry can do is become more diverse itself. Larger VC’s have been scrutinized for lacking diversity and have reacted by trying to become more inclusive. More work can be done. The industry can promote practices that actively reduce gender and racial bias at the workplace. Not only should this be done at the VC firms themselves, but also at portfolio companies. As investors, VC’s can advocate for change as advisors or board members.

Training and skills matching are also important to reducing inequality. Maine is a predominantly white State, — and in recent years we have had an influx of refugees and new Americans. At the same time, the Maine textile industry has suffered from a shortage of skilled workers. In response, CEI worked with a local textile company to develop a training program for new immigrants with sewing experience. In turn, this program works with other textile companies to train specifically to their needs in hopes of placing people in jobs once the training is complete.

At CEI Ventures we have a portfolio company that makes high end, ultra-light packs and tents for outdoor enthusiasts. After struggling to find and train stitchers, our portfolio company has successfully hired several from this training program.

Maine is a rapidly aging state, which will face a decline in working age people. It’s a major threat to the health of the state’s economy. Therefore, supporting opportunities for immigrants will be essential to the future of the State’s economy.

You are a VC who is focused on investments that are making a positive social impact. Can you share with us a bit about the projects and companies you have focused on, and look to focus on in the future?

At CEI Ventures we invest in companies offering good jobs, a living wage, basic benefits, and a fair and engaging workplace. To date, we’ve made investments in 64 companies which has led to the creation of 2,700 new jobs and the employment of over 4,600 people, including 2,200 in jobs targeted for people with low-to-moderate incomes. The businesses are wide ranging and have ranged from a compost company in a very rural part of Maine that uses waste from lobster and fish processing to create compost to network deployment company that hires a significant number of veterans.

Each of our four funds have been certified as CDFI’s by the U.S. Department of the Treasury. This commits us to supporting disadvantaged communities and low-income people through our investments. Attaining CDFI certification is a rigorous process and we are one of very few venture capitals firms to certify their funds. Today, only 1% of venture capital dollars are invested in rural America, yet there is an incredible amount of entrepreneurship in these areas. Moving forward, will be increasing our commitment to good jobs, and expanding economic opportunity in rural areas. We have a team of specialists who can work with companies to improve employment opportunities through pragmatic solutions that will benefit the employees, and, ultimately the company through improved engagement, retention, and profitability. We’re excited about this and think it will provide added value to our companies and their communities.

What you are doing is not very common. Was there an “Aha Moment” that made you decide that you were going to focus on social impact investing? Can you share the story with us?

As a CDFI, a primary focus of CEI Venture’s funds is to create good jobs that provide a living wage, basic benefits, and fair and engaging workplace. My “Aha Moment” came a few years ago when I had the opportunity to visit two food processing companies back to back. The first was a vegetable processing company that subleased space to a start-up portfolio company of ours. Management at the vegetable processor was hard on its employees, most made minimum wage, with no benefits. People were motivated by fear of being punished rather than a sense of pride or community. The tour had a terrible feel. No one would talk to you or look you in the eye. A few weeks later, there was a massive walk out and soon after the facility sold to a large nationwide conglomerate. About that time, our start-up moved out due to poor conditions and ongoing labor issues. The vegetable processor recently closed due to a listeria outbreak.

Later that day I was invited to tour a local lobster processing facility. Like the vegetable processing facility, these are tough jobs. It’s wet, cold, and people are on their feet all day — tough work. However, the employees where all smiling. They’d say “hi” or smile and nod as you walked by. They looked as though the enjoyed what they were doing. The plant manager told me they paid a living wage and offered basic benefits. Turnover was much less of an issue and many advanced from within. This company has grown to be a global brand and prides itself on fair treatment of employees, suppliers, and the environment.

Several years later, my experience at these two companies continue to reinforce the work we are doing. Good jobs are essential to building strong, vibrant, and resilient local economies. However, we also see direct link between good jobs and company performance though better retention, engagement, and loyalty.

Can you share a story with us about your most successful Angel or VC investment? Or an investment that you are most proud of? What was its lesson?

In 2013, CEI Ventures invested in a company that deploys communications infrastructure. At the time the company employed about 80 people and had just completed a large and challenging project that laid fiber optic cable thought Maine. The CEO was (and still is) a young army veteran with who gained his experience building out communications infrastructure for the army after 9/11. He impressed us with a set of unique qualities that would make him a good leader. He was passionate and focused, but also considerate.

The company had yet to raise capital beyond a couple friends and family, making CEI Ventures the first outside investors. Soon after our investment, the company had a terrible quarter. Poor weather had delayed several projects and a key customer put a freeze on spending. The situation for this communications company was bleak. But the CEO was against lay-offs and believed the company would bounce back. We trusted him, and also had confidence in the business model and the market. So, jumped in with follow-on investment to support the company during this challenging time.

Now, fast forward to today. The confidence in the leadership and the performance forecasts paid off. The company employs over 600 people, nearly 30% of them veterans, and has been named to the Inc 5000 list for 10 years in a row. Management has a commitment to actively combat racial and gender bias in the workplace. The company’s culture has created an incredibly loyal, high performing team that has allowed it to stay focused and on track during the pandemic.

What I’ve learned from this company is the importance of management. A good team will lead you though the bad times. Good managers can create cultures that are supportive, loyal, and drive performance.

Can you share a story of an Angel or VC funding failure of yours? What was its lesson?

We’ve had companies fail, and we’ve had companies that have eventually become large employers and contributed greatly to the local economy but fail to provide financial returns. We invested in a call center in a rural part of Maine that ultimately didn’t return any capital to our fund. However, the company employed around 50 people with good jobs for 20 years before it was sold. Like success, failure can be defined in different ways.

It’s painful when an investment fails to live up to its our financial expectations, but it’s far worse when livelihoods are lost. If a company is in decline we always advocate for a graceful and ethical wind up where employees, vendors, and creditors are taken care of responsibly. We’ve had companies who help employees to find jobs when they are let go. It’s the right thing to do and creates a lot of good will.

Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?

Unfortunately, it happens. We’ve missed opportunities different reasons including timing, deal size, or concerns over valuation. However, there are instances where we’ve turned a company down initially but made an investment later. Sometimes it takes a while to get comfortable with a team, product, or industry.

A while back, we looked at a company making residential wind turbines. As an ancillary product, they had developed a power inverter that would tie wind and solar together. The inverter also had “islanding” capability allowing you to use your alternative energy sources if the power went out. We liked the company, and the team, but couldn’t get comfortable with their assumption’s around residential wind. A few years later the company saw increased demand for their inverters and pivoted. We made an investment, and a few subsequent investments, before the company sold to a large power generation company. In the end, the company was a great employer, with an environmentally beneficial product. and provided a nice financial return to our fund.

While we didn’t invest initially, we did later, and this company became a success. When passing on an investment, never slam the door. You might regret it later!

Super. Here is the main question of this interview. What are your “5 things I need to see before making a VC investment” and why? Please share a story or example for each.

Commitment to employees and environmental sustainability:

All the companies we invest in sign a Social Agreement to work with us whenever possible to advance social responsibility. This includes:

  • hiring people of low incomes in partnership with CEI and other training organizations
  • provide quality benefits
  • institute programs that promote environmental sustainability
  • and provide social data which we can use to track progress

This is incredibly important to us and we need to be able to see a willingness to promote these social goals before we make an investment.

Integrity:

Like any successful relationship, honesty and integrity are important building blocks of any successful investment. We need to be able to trust our portfolio companies as partners. We’ve had instances where information sharing becomes opaque after the investment is made. It might be due to stress, self-preservation, or embarrassment. This only strains the relationship and makes it harder to help. Therefore, we need to feel confident that the management team will be honest and uphold the principles established at early in the investment period.

A logical and well laid out business model:

We want to build companies that will be successful over the long haul. We don’t move from fad to fad trying to make a quick buck on what is here today, gone tomorrow. A good business model should be thorough, easy to articulate, and leave room for innovation.

Passion:

Not to sound cliché, but we need to see passion! And passion for the right things, not just to make money on a huge exit. Passionate entrepreneurs are often knowledgeable of their field and are infectious with their desire to build a successful enterprise. They are also often are unwilling to quit when times get tough.

We have a portfolio company provides course registration software to adult ed providers and other alternative learning programs. During the early days of the pandemic, they saw course registrations fall dramatically. On top of that, previously enrolled participants immediately cancelled and requested refunds from providers. The CEO and his team dug in, motivated by a passion for both his business and his customers. In short time, he was able to work with to find solutions to address his customers challenges. Internally, seeing the CEO’s passion helped motive a loyal staff to go the extra mile.

Adaptability:

Investments never work out exactly is planned. There are always twists and turns which cans lead to plans taking longer and costing more than originally projected. On top of that shifting market dynamics, new competitors, weather events, or a global pandemic (who knew, right?) can disrupt business and threaten progress. Good teams can adapt to changes to make their company a success.

When the pandemic hit, we had two companies pivot to making PPE in a very short time, which provided stability to the businesses and helped eliminate the need for wide spread layoffs This also introduced their primary products to a new customers who had previously never heard of these companies. Now, as the need for PPE has subsided, their primary products are selling better than ever!

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

I am already part of a movement that I’d like to inspire others to join: working to create an economy that works for everyone. It’s apparent that many people are being left out of the economic mainstream. We know that economic growth and the creation of jobs are the building blocks of an economy that works for everyone. Yet, growth alone is insufficient to confront rising levels of inequality and reduced economic mobility, particularly in rural America. Improving access to capital, skills, information, and opportunity, particularly for people with low incomes is necessary to reaching this important goal.

CEI was founded with a mission to help people and communities, particularly those with low incomes, reach an adequate and equitable standard of living, working, and learning, in harmony with the natural environment. We believe growing good jobs directly addresses the systemic inequalities that are increasingly evident as the COVID pandemic unfolds, bringing injustice and racism to the center of a national discussion about economic opportunity and more broadly shared prosperity, which will help create an economy that works for everyone.

If you could tell other young people one thing about why they should consider making a positive impact on our environment or society, like you, what would you tell them?

In so many ways, climate change and economic inequality are interrelated. I have 3 kids and I think of the world they will inherit — the added cost, disruption, and health risk they will bear because of climate change. This will be amplified for those struggling to make ends meet.

As an economy, we have shifted to more service jobs over the past few decades. These jobs suffer far greater impact in times of natural disaster. Moreover, these jobs are typically low wage, often without benefits like health insurance or retirement savings which can provide a safety net. This puts additional stress on social service programs, the health care system, and local communities. This trend is likely to continue unless we change the course of climate change and income inequality. At CEI we are attempting to take this challenge head on by increasing access of good jobs and promoting environmental sustainability.

In summary, we are all in this together and should all be working to strengthen our communities. No matter how big or small your contribution is, it’s meaningful.

We are very blessed that a lot of amazing founders and social impact organizations read this column. Is there a person in the world with whom you’d like to have a private breakfast or lunch with, and why? He or she might just see this. 🙂

First of all, I love the outdoors and am a big fan of Patagonia as company and as a brand. Yvon Chouinard helped pioneer the idea of social entrepreneurship by providing good jobs and advocating for environmental sustainability. I’d love to sit down with him to hear about his experiences building Patagonia. He’s also from Maine originally!

How can our readers follow you online?

Yes! Find me on LinkedIn! https://www.linkedin.com/in/chandler-jones-6a9a1b51/

Thank you so much for this. This was very inspirational, and we wish you only continued success!

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