It is well known that 26% of Philadelphians live in poverty — a persistent challenge that perpetuates our status as the United States’ poorest large city.
After leading The Enterprise Center for 27 years, my experience has taught me that all of our region’s stakeholders — public and private — need to act strategically to overcome this challenge and change the lives of nearly 400,000 residents that endure poverty’s effects. I’m calling for real investment in a critical priority for 21st-century Greater Philadelphia: minority entrepreneurship.
Our challenge: equal economic solutions for all
Greater Philadelphia’s future success will be determined by our ability to invest in equal economic solutions for all residents, not just some. Today, despite Philadelphia’s majority-minority status, the minority population does not fully share in the city’s economic success.
We live in a white-dominated business ecosystem, in which 77% of businesses are owned by white individuals, who comprise just 35% of the city’s total population. Our minority population, which comprises 65% of our total regional population, owns just 23% of local businesses. And, the numbers are even more striking for black individuals, who make up 41% of the population but only own 2.5% of the businesses.
These statistics show that our region can and must play to our strengths in a more significant way. If we’re not investing in our minority population, we’re squandering the talent and innovation of minority entrepreneurs and their ability to drive positive regional growth and impact.
In serving 1,000+ minority entrepreneurs and enterprises over 30 years, The Enterprise Center has witnessed the potential and success when business owners, community members, and capital investors alike change mindsets about what prosperity looks like. Minority enterprises bring incredible value to our region’s leading organizations and anchor institutions. They receive prestigious awards, win significant contracts, create and retain jobs, generate revenue, and give back to our region. Greater Philadelphia cannot and will not reach its full potential without empowering far greater participation from people of color.
However, drive, intelligence and talent can only take an entrepreneur so far when butting up against an inherently racist system. Minority enterprises’ #1 challenge today is unequal access to capital due to the well-studied phenomena of systemic racism and pervasive implicit bias. Because minority entrepreneurs cannot access the full spectrum of capital required to grow a thriving business, they often finance their businesses with small amounts of high-cost debt.
This financial situation causes them to be risk managers instead of what they could and should be — growth innovators and leaders. The Enterprise Center is on a mission to remove this capital barrier and unlock the latent opportunity that’s right in front of us.
A critical mind-shift: from jobs to entrepreneurial growth
We need a catalytic solution with the strongest potential to move Greater Philadelphia into the role of a 21st-century region that leads with economic solutions for all of us. For this solution to happen, we must accept that we’ve unsuccessfully tackled poverty over and over again with the same tactics, expecting different results while never changing our approach.
Greater Philadelphia has traditionally prioritized programs that are pieces of a potential solution — like jobs and workforce/talent development, or for businesses, general technical assistance and small business loans. Minority communities need more than just these bare minimum resources: They need transformative capital investments to generate significant assets, as well as family and community wealth.
Across the United States, forward-thinking leaders understand the power of investing in minority entrepreneurship — as both a poverty solution and innovation opportunity. A national funder, The Surdna Foundation advises on the role that philanthropy can play in investing in high-growth minority enterprises. In Los Angeles, Founders First Capital is making equity investments in high-potential minority enterprises. In Baltimore, banks and community foundations are partnering to strengthen the minority entrepreneurship ecosystem.
If Greater Philadelphia is serious about equitable growth and becoming a national 21st-century leader, it cannot afford to continue relegating support for minority entrepreneurship to the back seat.
If we don’t act now, we risk being left behind by our peer cities, forever wringing our hands about our stubborn poverty rate without effectively addressing it. We must expand our focus from small pieces of the broader solution, to create a bold and comprehensive plan with minority investment and entrepreneurship as a central priority. If we do this, I believe we have what it takes to successfully grow our region’s 23% of minority business ownership and generate a catalytic effect on our region’s poverty and overall prosperity.
Modeling the path forward: a $50 million capital innovation fund
In fall 2019, The Enterprise Center celebrated 30 years of serving minority enterprises in the Greater Philadelphia region. As part of celebrating this important milestone and setting the stage for our future work, The Enterprise Center is leading the way to create a $50 million flexible equity fund to support our region’s high-growth minority enterprises.
This fund will serve as an innovative model that can and will — in collaboration with our national partners — be replicated across other U.S. cities. The summary of our Innovate Capital project (partially funded by the U.S. Department of Commerce Minority Business Development Agency) is available for all interested stakeholders.
We’ve worked with leading researchers, investors, entrepreneurs, and advisors to design a fund that we believe will solve for legacy challenges and inform a new path forward. The goal of this fund is to identify 25 scalable firms and invest an average of $2 million each. In addition to the capital, we will facilitate contracting opportunities and assist with planning for capacity building to expand each firm’s in-house expertise.
By doing these three action items concurrently — capital, contracts and capacity — we will positively shift Greater Philadelphia’s minority business environment. The results will be increased minority leadership in our communities, innovation, wealth generation, jobs and economic opportunity to convert distressed neighborhoods into prosperous ones.
The Enterprise Center strongly believes that minority entrepreneurship deserves this chance to reach its full potential in Greater Philadelphia. It deserves the opportunity to prove that we can generate a return on investment while building a new generation of minority business leaders in our city. We invite the city’s stakeholders — policymakers, funders, economic developers and more — to work with us in turning this vision into a reality. We do not need naysayers; we need believers who are willing to step up and lead with us.
Join me in launching Innovate Capital to achieve what we know is possible for our minority entrepreneurship community today and for Greater Philadelphia’s future: firstname.lastname@example.org.