RuralWorks Aims To Boost Rural Economies, Climate-Smart Agriculture, Local Food Systems

Businesses in rural communities typically fall under the radar of growth-equity investors. “Traditional sources of venture capital don’t go to these markets,” says Melissa Obegi, president of impact investor Conduit Capital, U.S. “They often stick with a more tried-and-true footprint.”

That’s why RuralWorks Partners was formed. Launched last year by Community Development Financial Institution (CDFI) Community Reinvestment Fund, USA and Conduit, it aims to build wealth and economic and climate resilience in rural communities, along with the number and quality of jobs, by investing in growth-stage businesses with the potential to expand. “These companies are starved for the capital critical to bringing their full potential to bear on community resilience and job creation,” says Obegi, who is also a board member of RuralWorks.

In August, it launched its first fund, RuralWorks Impact Partners 1.

A Focus on Agribusiness and Food

In 2021, the folks at CRF and Conduit started mulling over a possible collaboration that could address the dearth of financing in rural communities, providing a way to improve local economies and expand the use of climate-smart agricultural practices. What was needed, they decided, was money that could allow agribusiness and food industry businesses to thrive and grow. Investments of $1 million to $5 million would target such areas as sustainable and regenerative agriculture, local and regional food systems and circular economy, to name a few examples. And the enterprise would also provide other services, like business advice and access to markets.

Last year, they received certification for RuralWorks as a Rural Business Investment Company (RBIC), a USDA program that licenses for-profit developmental capital funds. The move allowed the enterprise to raise equity from the farm credit system.

A three-person management team runs RuralWorks. There’s also a four-person board and an advisory council with experts in rural innovation, consumer and food businesses and private equity and blended finance.

Building a Pipeline

As for investments, since launching their fund—the size has not been disclosed—they’ve been evaluating potential targets. “We’re building a robust pipeline of opportunities and preparing to deploy capital,” says Obegi. While the primary focus is businesses operating in the Northeast, the Great Lakes region and Upper Midwest, RuralWorks also considers investments anywhere in the country.

Tech companies are likely to be in the mix. “We’re very interested in the kinds of technological developments that are being created in rural communities,” says Obegi. To that end, RuralWorks works with organizations like the Center on Rural Innovation, which promotes rural regional technology hubs, for deal sourcing. Plus, thanks to the rise of remote work, Obegi sees the potential for more talent to relocate to rural areas. In addition, a federal government focus on rolling out rural broadband should improve web access.

“It’s an example of the kinds of collaborations across non-traditional parties that address fundamental systemic and critical challenges we face,” says Obegi. “We can contribute to a blueprint for a rural renaissance.”