Elyse Cherry is President of the Boston Community Venture Fund, a Boston-based community development venture fund.


Q. How did you come up with the idea for your business?

A. The venture fund grew out of Boston Community Capital, a small fund which lends money to people building affordable housing in low-income communities, started in 1985. We launched Boston Community Venture Fund, in 1997, to fill what we thought was an untapped niche: helping local low-income entrepreneurs from low-income communities, where access to capital is not easy to come by. Our mission is to help build businesses that will help build healthy communities. Our first fund is $5 million; it's made 13 investments. We also raised a second fund, which is now about $16 million.


Q. How have you funded the business?

A. We have a series of investors -- banks, foundations, individuals. We also received government money from the Community Development Financial Institutions Fund.


Q. What is the biggest challenge you've faced, and how have you resolved it?

A. Community development venture capital is a brand new animal. We're persuading investors to invest in something no one has tried much before, and that's very difficult. We do that by talking about how investing in these companies will strengthen them to the point [that] they become good bank customers and generate a lot of jobs: That part appeals to people's philanthropic interests. Also, we've talked a lot about our ideas for how to exit. One of the great challenges of investing money in small business is how do you get your money out the other end. We received a grant of about a quarter-million dollars from the Ford Foundation to come out with a new exit approach.


Q. What's the biggest mistake you've made as a small-business owner, and what did you learn from it?

A. We made a decision early on to stay away from Internet companies. At some point along the way, I allowed myself to be talked out of that posture and chose one. It is the only loss we have had. I learned that, when you know what you're supposed to be doing, you've got to stick to your knitting.


Q. Have you changed you business strategy and in what way?

A. Initially, we thought we'd be doing smaller deals than we've been doing. We've discovered that under $300,000, it's pretty tough to do a deal. And I think we have a greater diversity of companies that we thought we would.


Q. What has been the biggest surprise you've met with and how have you dealt with it?

A. When we were trying to get our first fund funded, it was really difficult. I said, if we could get Robert Rubin, who was Treasury Secretary, to join in a celebration here, we could get everyone to invest. So, I contacted him. And I went to the banks and said, "if you invest in me, we can get Rubin up here." The biggest surprise is, we pulled it off.


Q. Who in the business world do you look up to and what have you learned from them?

A. They're not the usual people. There's Ed Dugger, who runs the Business Collaborative, a group trying to connect minority business enterprises with major corporations. He's a very interesting guy in terms of thinking about how business grows. Pat Hanratty, who used to be undersecretary of labor in Massachusetts, and is now a senior executive at the Bank of Rhode Island, is someone with a wonderful mind for figuring out new ventures. And Carol Tye, who just retired as superintendent of schools in Revere. I've learned an enormous amount from her about negotiations and how to move a process from plan to execution.


Q. How do you set yourself apart from others in your industry?

A. I don't want to be a third-rate venture fund. I want to be a first-rate community development venture fund. In the community development venture capital industry, everybody's got a somewhat different strategy. Our strategy is to invest in companies with a social and financial return, but where the social return emerges from the business model. We try to find companies with a solid business reason for existing, and then look for the social return, like providing jobs for low-income folks, better goods and services for low-income communities, or a strong environmental bent.


Q. What one piece of advice would you give someone starting his or her own small business?

A. To be successful, of course, it's not just about a good idea or a good product. You need some kind of understanding about your marketplace. And you need a set of advisers, formal or informal, who can really help you think through all the different pieces that make a successful business.