SBA and Diamond Ventures Reach Agreement to Resolve Lawsuit

WASHINGTON, Nov. 24, 2010 /PRNewswire/ -- The U.S. Small Business Administration and Diamond Ventures, LLC, an Atlanta-based venture capital firm, have reached an agreement to settle Diamond Ventures' seven-year-old discrimination lawsuit against the agency.

Under the terms of the Nov. 22 agreement, Diamond may proceed with its application to the agency's Small Business Investment Company (SBIC) program, which supports efforts to extend equity to small and minority businesses. The lawsuit, filed in 2003, had alleged that the SBA wrongfully denied Diamond's application to participate in SBIC

"First, I thank God, who strengthened me along the way, for the end of this protracted litigation. By placing Diamond Ventures squarely on the path towards becoming an SBIC, the SBA has taken a giant step towards making a significant impact in those minority business and low and moderate income communities that have heretofore been most underserved by traditional venture capital firms," said C. Earl Peek, Diamond Ventures' managing partner.  "With our unique focus, Diamond will demonstrate to the broader financial markets once again that sound business investments in predominantly minority communities generate great economic growth, profits, and jobs just as in any other community."  

Bill Heyman and Franklin Lee, attorneys for Diamond Ventures, LLC, and Partners with Baltimore-based law firm of Tydings & Rosenberg, said the settlement "signals a new era for enhanced access to capital for underserved and minority business markets.  This is not only a good day for our client, Diamond Ventures, and for the Small Business Administration; it is great day for small businesses and minority communities throughout America."

SBA issued a "green light" letter to Diamond, authorizing it to approach potential investors for commitments of regulatory capital required under the program that will allow Diamond to use up to $150 million from SBA to invest and lend.  The settlement agreement further calls for SBA to streamline the formal SBIC licensing application process for Diamond.  "We will seek CRA investments from banks as well as insurance companies, high net worth accredited investors and foundations to round out a $200 million venture fund," said Peek.

"SBA is very focused upon continuing and improving its outreach to underserved markets," said Sarah Lipscomb, SBA's General Counsel.  "The Small Business Investment Company (SBIC) program provided over $1.5 billion in financing support for small businesses last year.  SBA is committed to ensuring that emerging markets have access to the necessary growth capital to help small businesses grow and create jobs."  

Following a federal court ruling in March SBA's Motion for summary judgment, a trial date was set by the Judge for Feb. 17.  The parties then entered into a sustained period of mediation and settlement discussions that ultimately led to the settlement.

"Diamond Ventures enthusiastically looks forward to fully participating in the SBIC Program and the achievement of our mission and vision to provide needed growth through capital investments in emerging markets and in small and medium-sized businesses," said Peek.

Diamond thanked the Obama Administration for its efforts to help Main Street. Recent passage of the Small Business Lending Fund Bill, the settlement of the USDA Farmer case, and the implementation of Women owned business contracting standards all help main street access capital and create jobs as will SBIC's with our focus, said Peek.

Herb Wilkins, Sr. Founder of SYNCOM, a leading venture capital firm, focused on growth stage investments in emerging and underserved segments of the media and communications industry since 1977, provided technical support, mentoring, investment and strategic advice to Diamond. SYNCOM is best known as investors in BET, Radio One, Essence Magazine, and Iridium among many successful investments in minority and general media.

SOURCE Diamond Ventures, LLC