Pittsburgh’s minority entrepreneurs will have a new gov-backed source of venture funding.
The City of Pittsburgh’s economic development arm, Urban Redevelopment Authority of Pittsburgh (URA), announced this morning that it will launch two new social impact pilot programs centered on supporting minority entrepreneurship and business expansion, pending an approval vote from the authority’s board of directors.
The programs, which will be called URA Ventures and the Minority and Women-owned Business Enterprise (MWBE) Developer Equity Fund, will provide early-stage risk capital to business owners and entrepreneurs from underrepresented backgrounds. That capital will come from a planned $5 million in funding that the URA hopes to obtain through its own resources, the American Rescue Plan Act, and other public and private funding, per a press release.
“The City of Pittsburgh holds tremendous economic opportunity,” Mayor Ed Gainey said in a statement. “But we need to work together to ensure that this opportunity is equitable and that it empowers MWBE entrepreneurs that for too long have been left behind. If we are going to grow our city then we need to grow and invest in our minority businesses.”
Answering the call for needed resources
That concern comes from real data showing a lack of local Black entrepreneurship in particular. Last month, online lending marketplace LendingTree published a study that identified Pittsburgh as having the lowest rate of Black-owned businesses compared to 49 other American metros examined. And that’s undoubtedly contributed to a lack of higher income levels among Black residents in Pittsburgh.
While notable local tech and entrepreneurship leaders like Meter Feeder cofounder and CEO Jim Gibbs and Black Tech Nation founder and CEO Kelauni Jasmyn have shared how they and others are working to change those statistics, they also point to a need for commitments from the public and private sector to achieve it. Though $5 million isn’t enough to resolve all of that need, it’s a sign that the new city government administration is committed to fulfilling some of its promises to promote economic opportunities and equity for all residents.
“This investment is designed to provide a multitude of benefits,” URA Executive Director Greg Flisram said. “From lowering barriers to entry and increasing access to capital to supporting MWBE-led small businesses and job creation, these programs encourage quality, locally controlled, wealth building and economic stability opportunities for Pittsburgh communities, particularly those located in an Avenues of Hope corridor.”
What the funds will do
The URA Ventures program will be an early-stage diversity-focused fund, providing support and investment in Pittsburgh-based companies. Through three programs within the fund — Main Street Ventures, Pittsburgh Entrepreneur Fund 2.0 and Venture Co-Investment — URA Ventures will allocate at least $3 million towards higher-risk portfolio investments that prioritize impact over economic return (recalling a criticism of the local funding and philanthropy scene from Work Hard Pittsburgh’s Josh Lucas). Overall, URA Ventures plans to use its initial funding toward supporting 41 businesses and creating over 80 jobs.
The remaining $2 million will go toward the MWBE Developer Equity Fund, which the URA said will provide direct equity investments in real estate development ventures sponsored by MWBEs. These investments will be made through a shared risk-reward structure that gives more focus to the return on investment to the URA than the URA Ventures program does.
“Many MWBE businesses and founders have difficulty accessing risk capital and liquidity to expand businesses and sponsor real estate development projects,” said URA Chief Strategy Officer Thomas Link in a statement. “The URA has a long, successful history of investing directly in small businesses and supporting MWBE businesses through debt and investment products such as the Micro-Enterprise Loan Fund, the Minority Business Recovery and Growth Loan Fund, and other tools. URA Ventures and the MWBE Developer Equity Fund pilot programs seek to build upon this foundation to provide additional liquidity and risk capital to Pittsburgh’s MWBE business community through a suite of programs.”
Technical.ly has reached out for clarification on whether these new programs are the City of Pittsburgh’s first that include venture capital and will update this story if we hear back.
Those interested in learning about how to apply programs or advance funding for them can attend one of the URA board’s monthly Zoom meetings. The next one will be on Thursday, Mar. 10, at 2 p.m.
Sophie Burkholder is a 2021-2022 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Heinz Endowments. -30-