Lafayette Square Invests in Middle Market Companies
We seek investment opportunities that stimulate economic growth across the United States through the creation and preservation of working-class jobs.
We seek investment opportunities that stimulate economic growth across the United States through the creation and preservation of working-class jobs.
Our Investment Strategy Goals by 2030 are:
Support
100,000 working class jobs
Invest
50 percent of capital with underserved communities
Curate
benefits for 50 percent of our portfolio companies
Our Business is Organized Around Four Principles Designed to Build Trust:
These principles represent our standard of transparency and our commitment to building trust among our investors, portfolio companies, and their employees.
Investments
3x
Low-income workers are about 3x less likely to participate in employer retirement and healthcare plans than higher-income employees.
Footnotes/Sources
[1] Lafayette Square analysis of data of middle market companies and employees from Dun & Bradstreet. “Middle Market” is defined as a private company with annual revenue between $10M-$1B.
[2] Turnover rate is calculated by dividing the total terminations for the calendar year by the average number of employees who worked during or received pay for the calendar year. National turnover includes private employee data from the U.S. Bureau of Labor Statistics - Job Openings and Labor Turnover Survey.
[3] Medical Care Benefits are plans that provide services or payments for services rendered in the hospital or by a qualified medical care provider. Participation is calculated from the unrounded percentage of workers who participate in the plan. National average is private industry from the U.S. Bureau of Labor Statistics - National Compensation Survey.
[4] Retirement Benefit plans Includes defined benefit pension plans and defined contribution retirement plans. Participation is calculated from the unrounded percentage of workers who participate in the plan. 366 employees from portfolio companies who did not provide retirement benefits data to the Company were not included in this calculation. The national average is private industry from the U.S. Bureau of Labor Statistics - National Compensation Survey.
[5] LMI is defined under applicable CRA regulation as an individual income that is less than 80 percent of the area median income (“AMI”) or a median family income that is less than 80 percent in a census tract. AMI is defined as the median family income for the metropolitan statistical area or metropolitan division, if applicable, or if the person or census tract is located outside of a metropolitan statistical area, the statewide nonmetropolitan median family income.
[6] National median income data is from the U.S. Census Bureau - 2021 American Community Survey. This is the most recent data available as of March 2023. Median family income is used to calculate individual LMI per CRA guidelines. The metric is included at the national level to serve as a similar–but not exact–comparison.
Access to Capital is Geographically Biased
We define middle market businesses as companies that typically have annual revenues between $10 million and $1 billion and EBITDA between $10 million and $100 million. We are industry agnostic and invest primarily in the form of senior, secured loans.
We believe the demand for capital in growing, middle-market companies headquartered outside of high-income places is an overlooked opportunity.
Our place-based strategy enables us to identify investment opportunities while improving the lives of workers employed by these businesses through a proprietary offering of comprehensive benefits. This approach seeks to create better financial and social outcomes for all stakeholders.
We use data as a risk mitigation tool. Public and private data sets inform analysis conducted by Potomac X Lafayette Square, our proprietary analytics platform. Worker Solutions is our services platform delivering benefits informed by Potomac X Lafayette Square.
Services: Worker Solutions
Footnotes/Sources
[1] Lafayette Square analysis of data of middle market companies and employees from Dun & Bradstreet. “Middle Market” is defined as a private company with annual revenue between $10M-$1B.
[2] Turnover rate is calculated by dividing the total terminations for the calendar year by the average number of employees who worked during or received pay for the calendar year. National turnover includes private employee data from the U.S. Bureau of Labor Statistics - Job Openings and Labor Turnover Survey.
[3] Medical Care Benefits are plans that provide services or payments for services rendered in the hospital or by a qualified medical care provider. Participation is calculated from the unrounded percentage of workers who participate in the plan. National average is private industry from the U.S. Bureau of Labor Statistics - National Compensation Survey.
[4] Retirement Benefit plans Includes defined benefit pension plans and defined contribution retirement plans. Participation is calculated from the unrounded percentage of workers who participate in the plan. 366 employees from portfolio companies who did not provide retirement benefits data to the Company were not included in this calculation. The national average is private industry from the U.S. Bureau of Labor Statistics - National Compensation Survey.
[5] LMI is defined under applicable CRA regulation as an individual income that is less than 80 percent of the area median income (“AMI”) or a median family income that is less than 80 percent in a census tract. AMI is defined as the median family income for the metropolitan statistical area or metropolitan division, if applicable, or if the person or census tract is located outside of a metropolitan statistical area, the statewide nonmetropolitan median family income.
[6] National median income data is from the U.S. Census Bureau - 2021 American Community Survey. This is the most recent data available as of March 2023. Median family income is used to calculate individual LMI per CRA guidelines. The metric is included at the national level to serve as a similar–but not exact–comparison.
It Takes Capital AND Services to Make Impact
Worker Solutions seeks to improve employee retention, well-being, and productivity by connecting workers to a curated list of third-party providers that offer nontraditional benefits. By delivering these benefits, we aim to reduce operational risk for our portfolio companies, help them attract and retain talent, and improve job quality.
We believe that over time our portfolio companies' uptake of our comprehensive benefits, in combination with our capital, will result in improving the lives of employees.
Analytics: Potomac X Lafayette Square
We Utilize Data Analytics as a Risk Management Tool
Potomac X Lafayette Square is a data platform that informs risk decisions based on localized socioeconomic and financial data.
Built to help businesses understand challenges within their specific community, we leverage our data platform to analyze key labor challenges affecting middle market employees to drive worker productivity:
- Recruitment and retention of labor, particularly frontline workers
- Uneven uptake of traditional workplace benefits
- Impact of inflation on employees, particularly LMI workers
We also analyze our portfolio companies’ employee data to identify ways to improve worker well-being with the goal of driving and tracking impact.
Governance
We Align Our Strategy with Regulatory Intentions
Lafayette Square is committed to building trust with our investors, portfolio companies, and their employees. Our 2030 goals are aligned with three regulations: the Small Business Investment Act (the “Investment Act”), the Community Reinvestment Act (the “CRA”), and the Small Business Investment Incentive Act (the “Incentive Act”).
Press
The IA 50 Emerging Impact Manager list spotlights newer fund managers to watch that may demonstrate future potential to create meaningful impact. Criteria such as minimum track record or minimum assets under management may not be applicable.
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