CNote uses technology to empower investors to underwrite CDFIs more rapidly and effectively with better risk controls than ever before.
Why CNote is focused on CDFIs
CNote Makes It Easy To Invest in CDFIs
CDFIs have a long history of delivering deep community impact and bringing resources and economic opportunity to underserved communities.
- Every CDFI shares a common goal of expanding economic opportunity in low-income communities by providing access to financial products and services.
- They are federally certified by the CDFI Fund, an agency within the U.S. Department of Treasury.
- Historically, investing in CDFIs was difficult and limited to sophisticated investors or to individual CDFIs on a case by case basis.
- With CNote, investors of all sizes can deploy capital into communities through a diverse pool of CDFIs with ease.
Using technology to democratize access
The Challenge: Unlocking CDFIs
The underwriting process for CDFIs has been historically manual, time-intensive, and expensive. This means that most investors are only working with a small subset (2% or less) of the CDFI Industry. Why?
- Underwriting a single CDFI is a time and resource-intensive process that can cost hundreds of hours in contractor or employee time.
- The average institutional time to underwrite and then invest in a CDFI is often 6 months or more.
- Data acquisition has remained manual, meaning a large amount of time must be spent collecting data and gathering inputs before analysis can even begin.
- CDFIs are idiosyncratic — the ability to underwrite other asset classes may not readily transfer to the CDFI market.
- Subjective and relationship-driven CDFI underwriting can also increase bias and lead to less-informed underwriting decisions.
What We Do
The Solution: CNote Underwriting Technology
The technology CNote has developed makes every phase of the CDFI investment and evaluation process more reliable, transparent, and seamless for both CDFIs and their investors.
- CNote’s technology greatly reduces the cost and time of connecting investors and CDFIs.
- Data acquisition, validation, and underwriting are streamlined automatically through CNote’s diligence engine.
- CNote’s data collection framework is designed in collaboration with CDFIs to make the underwriting process less onerous for these resource-limited organizations.
- CNote continuous data monitoring capabilities allow investors to regularly evaluate portfolio health.
- CNote’s technology helps to reduce bias and fairly capture the risk related to smaller CDFIs and those led by people of color.
CNote CDFI Technology Use Cases
A community foundation uses CNote technology to reduce investment time from 6-months to three weeks.
A family office leverages CNote’s underwriting capabilities to expand its CDFI portfolio to include more geographic diversity and add CDFIs led by people of color.
An institutional investor improves their risk underwriting by deploying their customized risk metrics and ratios on top of CNote’s already robust criteria.