Mission Driven Finance: Bridging Capital Gaps for Local Economies

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In episode 82 of the Investing in Impact podcast, I speak with David Lynn, Co-Founder and CEO of Mission Driven Finance (MDF), an organization focused on closing capital gaps and catalyzing economic opportunities in underserved communities.

In this conversation, David shares his unconventional journey from tech to finance and the catalysts that led him to establish MDF.

We dive into MDF’s mission to bridge capital gaps by focusing on private credit and real estate to support local businesses, and David highlights the importance of community-driven due diligence, where relationships are prioritized over traditional metrics.

David also discusses the diverse sources of capital backing MDF, including foundations, high-net-worth individuals, and institutional investors, and MDF's expansion from its roots in San Diego to a national scale.

Looking forward, he outlines MDF's ambitious goal of moving a billion dollars into communities by 2027 and the broader potential for blended finance policies to drive growth in impact investing.

About David

David Lynn is the Co-founder and CEO of Mission Driven Finance, an impact investment firm he launched in 2016 to bridge financial gaps and increase access to capital for purpose-driven organizations and bold initiatives.

Based in San Diego, Mission Driven Finance operates with the core goal of making it easier to invest directly in local communities, creating structured financial products aimed at closing opportunity gaps across diverse sectors.

As a Certified B Corporation, the firm upholds high standards of social and environmental performance, accountability, and transparency.

David’s career in impact and finance extends beyond Mission Driven Finance.

He has held roles with The Price Group, providing investment management expertise to the Price Philanthropies Foundation, and serves as a Board Trustee and former Chair of the San Diego Humane Society, helping advance animal welfare in the San Diego area.

David also helped found Mission Edge, a San Diego nonprofit that supports other nonprofits with financial visibility and operational growth, and has been actively involved in San Diego Social Venture Partners, where he has dedicated years to scaling the impact of local nonprofits.

About Mission Driven Finance

Mission Driven Finance is a private impact asset management firm pioneering a new financial model that bridges the gap between philanthropy and traditional investments, with a mission to make community-centered investing accessible, impactful, and transformative.

By focusing exclusively on private market impact transactions, the firm works to fill funding gaps left by traditional lenders, empowering bold visions, innovative enterprises, and high-potential community initiatives to thrive.

Mission Driven Finance collaborates with foundations, health organizations, banks, and community development partners to build an ecosystem of support, including major supporters like The California Endowment, Conrad N. Hilton Foundation, Surdna Foundation, and the San Diego Foundation, among others.

Episode Transcript

Host (Grant):
Hey everyone, welcome to another episode of the Disruptors for Good podcast. I’m excited to talk with David Lynn, Co-Founder of Mission Driven Finance. Today, we’re diving into David’s path to impact investing and the creation of Mission Driven Finance (MDF). David’s journey is unique, going from a tech background to working with family offices to create social change. David, thank you for joining me today!

David Lynn (MDF):
Thanks, Grant! My journey was a winding road, like many in this space. It wasn’t a straight path from traditional investment banking. I started in tech, working on database systems and decision-report frameworks for financial companies. Over time, I got into working with family offices on portfolio risk, derivatives, and other investments. Meanwhile, I was volunteering for nonprofits and social entrepreneurs, which eventually led to the creation of Mission Driven Finance.

[03:19]

Host (Grant):
You mentioned family offices and nonprofits. Was there a moment or specific catalyst that made you realize there was space for a firm like MDF?

David Lynn (MDF):
It was more of a combination of factors. I worked in investment management for family offices with foundations, often supporting nonprofits. As I volunteered in my community and engaged with nonprofits, I started seeing foundations wanting to do more with their assets, asking about loaning money to nonprofits. Around that time, impact investing was growing, and I felt that San Diego, my home, needed an impact-focused financial intermediary. So, we formed the San Diego Impact Investors Network and later Mission Driven Finance to bridge capital and community needs.

[07:22]

Host (Grant):
Can you give a quick overview of MDF’s mission for those who may not be familiar?

David Lynn (MDF):
Of course! Mission Driven Finance exists to move capital into communities where traditional financial structures don’t reach. We aim to close capital gaps that hinder opportunity. Our focus is on missing middle financing—usually private credit and real estate in underserved areas—by working with investors on one side and community partners on the other to get money moving.

[08:43]

Host (Grant):
Could you give an example of MDF stepping in to address this "missing middle" gap?

David Lynn (MDF):
Sure! Our advanced strategy in San Diego, our first project, provided loans to small businesses and social enterprises that couldn't access SBA loans, microloans, or venture capital. These companies might need $300,000 to $1 million but lack hard assets or a strong credit profile. By focusing on inclusive economies, we provide "friendly factoring" loans that meet real cash flow needs over 12-24 months without requiring personal guarantees or hard collateral.

[11:04]

Host (Grant):
You mentioned not requiring personal guarantees or hard assets. How does MDF handle due diligence differently to manage risk?

David Lynn (MDF):
We take a very relationship-based approach, almost like private equity. We meet with founders, get to know their businesses, and then structure deals to match cash flow patterns. We accept some level of risk, knowing that if we have a 0% default rate, we probably aren’t taking enough risk. Instead, we’re looking for companies where the biggest risk is time. This way, if growth is slower than expected, we can still work with them to reach successful outcomes.

[15:08]

Host (Grant):
Is MDF focused more on physical businesses or do you support digital businesses as well?

David Lynn (MDF):
It varies. While we have brick-and-mortar clients, we’re primarily looking for consistent cash flow, so we support both types of businesses. We've backed startups with government contracts and health-tech companies, which aren’t always traditional physical locations. Many of our clients are business-to-business or government-focused with growing contract opportunities.

[18:05]

Host (Grant):
Where does MDF’s capital come from? Is it primarily foundations and high-net-worth individuals?

David Lynn (MDF):
Yes, our investors are mainly foundations, high-net-worth individuals, and those building impact portfolios. We're currently at an inflection point, aiming to bring in more institutional capital. This is crucial for scaling impact, as institutional players often need funds to be at a certain size before investing.

[20:36]

Host (Grant):
Is MDF still San Diego-focused, or is it now operating nationwide?

David Lynn (MDF):
We’re nationwide now. Though we started in San Diego, we’ve partnered with organizations across the country, including the New Mexico Finance Authority, LA Clean Tech Incubator, and others. We believe community-level insights drive good deals, so we focus on partnering with local agencies and organizations nationwide.

[23:35]

Host (Grant):
What’s the impact of scaling to institutional levels for MDF?

David Lynn (MDF):
To solve big community issues globally, capital must flow at scale. Reaching institutional levels allows us to mobilize billions. However, these players typically require larger fund sizes and extensive track records. So, for us, scaling isn’t just about size—it’s about structuring high-quality investments that can be accessed by larger allocators.

[26:17]

Host (Grant):
How did you and your partner structure MDF for long-term success?

David Lynn (MDF):
We initially considered a hybrid nonprofit/for-profit structure but ultimately registered as an LLC and certified B Corp. Our role as a Registered Investment Advisor allows us flexibility to partner with other nonprofits and CDFIs without replicating existing structures. We aim to mobilize private capital alongside philanthropic and public sources.

[28:38]

Host (Grant):
CDFIs seem to have some overlap with MDF’s mission. Did you consider becoming a CDFI?

David Lynn (MDF):
Yes, we debated it but decided against it to maintain flexibility. Most CDFIs focus on microloans and asset-backed loans, while we target the missing middle with cash flow-based loans. Partnering with CDFIs allows us to address different parts of the capital stack.

[32:24]

Host (Grant):
What advice do you have for entrepreneurs seeking credit-based capital?

David Lynn (MDF):
For those looking to borrow, understanding your debt and capital stack is essential. Show potential lenders a detailed cash flow projection, ideally with scenarios for best and worst cases. This shows that you have a handle on the financials and helps us confidently back your business.

[35:32]

Host (Grant):
Are there any policies that could unlock more impact investing?

David Lynn (MDF):
Yes, there’s opportunity for both federal and local policies. At the federal level, initiatives like the State Small Business Credit Initiative (SSBCI) and the Greenhouse Gas Reduction Fund show promise. Locally, governments can support blended finance structures that leverage public dollars to attract private investment. For example, New Mexico’s Finance Authority allocated $10 million to leverage $20 million-plus in private capital, which has made a huge impact.

[38:39]

Host (Grant):
What are MDF’s goals for the next 3-5 years?

David Lynn (MDF):
Our goal is to move $1 billion into communities by 2027 across childcare real estate, emerging managers, and private credit. We want to reach institutional platforms so that organizations like CalPERS can allocate capital at scale to community initiatives. It’s a long game, but we’re dedicated to setting up the infrastructure and track record to make it happen.

Host (Grant):
Thank you, David, for sharing MDF’s mission and insights on impact investing. Best of luck in achieving your goals!

David Lynn (MDF):
Thanks, Grant. I look forward to continuing this journey and seeing how we can make a difference together.