News & Update

Putting Entrepreneurs of Color in the Center: What Ecosystems and City Government Can Do

Living Cities has been working with eight municipalities that are trying new approaches to address the fragmentation and barriers that founders of color experience in their communities. Like many cities, they recognize their local economy is weakened when their entrepreneurs of color are not able to hire more talent, increase their sales and go after more contracts because of lack of capital, technical support or prohibitive policies.

These cities are part of two initiatives – Start Up, Stay Up, Scale Up [SU(3)] and City Accelerator – that are designed to support local organizations and players to build more inclusive entrepreneurial ecosystems, particularly for high-growth entrepreneurs of color and those looking to grow their businesses. The cities recognize the need to support Main Street businesses and startups owned by people of color. When we developed SU(3) and our City Accelerator on Local Business and Job Growth, we wanted to address the dearth of coordinated support and adequate services for entrepreneurs of color wishing to scale exponentially, and those who are growing locally. (Since then, EndeavorFederal Reserve of Kansas CityKauffman Foundation and others have released recommendations to support entrepreneurs of color.)

The cities didn’t have a blueprint to follow. But Living Cities was fortunate to engage two ecosystem-builders to coach them. Rod Miller and Monique Woodard have developed networks in U.S. cities that use the power of policy and partnerships and increased investment in entrepreneurs of color. They are sought after by entrepreneurial ecosystem players all over the world to exchange lessons and advise entrepreneur networks.

We recently reflected on their experiences coaching different ecosystem actors. Monique has been working with community foundations, economic development organizations, and venture capital investors. Rod has been collaborating primarily with local government staff. Despite the different levels of power and authority that these organizations and their staff possess, they all have acknowledged their roles as gatekeepers—to funds, to relationships, and to information—in their cities. They have worked on applying a racial equity lens to solutions that are based on direct connection with entrepreneurs of color. Based on these connections, the cities Rod and Monique are coaching have increased their awareness of the impact of structural racism on their entrepreneurs’ businesses. Several themes have emerged from this work that probably sound familiar to others working with and supporting entrepreneurs of color:

  • Being a majority of the population does not mean you get a majority of the receipts: Newark and New Orleans are investing in systemic interventions that will help Black founders and businesses participate in their city’s growth industries and get a larger share of the pie.
  • Cultural implications of raising capital and revenue in majority Latinx cities: Albuquerque and El Paso acknowledge that cultural values influence the growth ambitions of their local entrepreneurs and their capital needs by developing strategies that address the barriers that these entrepreneurs face in finding investors and getting contracts.
  • Robust ecosystems do not equal equitable ecosystems: While the creation of new firms and deal flows are constant, Atlanta and San Francisco must tackle the displacement of entrepreneurs of color that has come from more capital in their markets and the resulting rise in residential and commercial real estate costs.
  • Institutions are not always trusted service providers: Long Beach and Rochester are demonstrating how local government can apply a racial equity lens to economic development by investing in transformative partnerships with community-based organizations to better serve entrepreneurs of color.

With Monique and Rod’s expertise, the cities were able to re-evaluate some of their proposed solutions to addressing gaps in services and capital access. As Monique advises, “When you consider what can be fixed: assume the deficiency of the ecosystem, not the deficiency of the entrepreneur.”

While investing in capacity-building programs can be helpful, or focusing on networking and matchmaking events can help to catalyze relationships, these activities alone do not make an ecosystem. To dismantle the systems that exclude entrepreneurs of color from resources, local government, foundations, and anchor institutions must fix their own processes and policies.

For example, we far too often have seen government interventions perpetuate the narrative that communities of color are always low-income communities. Services to entrepreneurs of color are consequently seen as social service programs. As influencers in their ecosystem, city staff must interrogate their perceptions of entrepreneurs of color and take action to undo any negative effects their governments generate. Cities need to use their power. Identifying the role of the government in their ecosystem is the topic of Rod’s upcoming City Accelerator implementation guide for practitioners, Economic Revitalization through Diverse Business Growth: A How to Guide for Cities (working title). In it, Rod challenges cities to think about how often they put entrepreneurs of color in a box and address their issues from a social service or political lens. He has seen too many grants offered to entrepreneurs of color that require them to serve a certain market, locate in a particular neighborhood, or hire certain residents. These strings are not and have not been attached to all entrepreneurs seeking funds or resources from the city.

“Local government needs to change the culture of the way their city does business with entrepreneurs of color and ask themselves how they can engage them in an authentic way that provides those entrepreneurs with greater access to markets, capital, and partners,” Rod says.

This week, the Project on Municipal Innovation will meet, and I will be facilitating a conversation with Rod and Monique to engage mayoral chiefs of staff to consider how they can shape the culture of government to foster growth for businesses of color in coordination with other ecosystem actors. Later in October, Monique, T.D. Lowe and I will be speaking with impact investors on the SOCAP stage, offering them solutions to the challenges that high-growth entrepreneurs of color face.

Whether you are in local government, a business-serving organization, a funder of ecosystems, an investor, we encourage you to look for more strategies, lessons and inspiration from our inclusive ecosystem communities of practice on this site.

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