Does Philadelphia have enough resources to support entrepreneurs of color? - Technical.ly Philly

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Oct. 2, 2019 6:08 pm

Does Philadelphia have enough resources to support entrepreneurs of color?

When we asked industry leaders, founders and funders, they often answered quickly: No. So what's needed to change that?
The view of Center City Philadelphia from Northern Liberties.

The view of Center City Philadelphia from Northern Liberties.

(Photo by Julie Zeglen)

“I was young, I was Black, and I was a woman. And I found that that was not a recipe for success in Philadelphia.”

That’s not the case for everyone, Martice Sutton, founder of Girls Going Global, a nonprofit addressing the disparity of girls of color in international education, told a crowd of Philly bigwigs at September’s Greater Philadelphia Leadership Exchange (GPLEX) summit.

“That was just my experience,” she said. “I’m not going to generalize and say that’s what everyone goes through. But I felt that was what I went through.”

Sutton had tried to start her organization here in 2012, but the idea of giving young girls the opportunity to travel just wasn’t sticking. She was struggling to find a community here that would support her and her business idea.

Ultimately, she found that the scene here had a high barrier to entry than elsewhere. There was a struggle to gain access to financial capital, and “human capital” — the folks who could help her work get off the ground, mentor her or introduce her to the people who could, she said.

“If you can’t get into the room or you can’t go to the gala, you’re not going to meet the people you need to meet,” Sutton told Technical.ly.

After years of struggling to make space for herself in Philadelphia, Sutton found success in Atlanta. The founder had been digging her heels in this city, even getting a masters in nonprofit management from the University of Pennsylvania, but keep hearing about Atlanta’s growing scene for young, Black professionals.

In 2016, Sutton moved Girls Gone Global’s headquarters to the southern city, and found a startup culture that was more open to risk taking. She’d finally found the diverse professional network she’d been yearning for in Philadelphia.

“Philadelphia’s super diverse, but can still feel really segmented in a way that Atlanta doesn’t,” she said. “There was more of a willingness to bet on people.”

Barriers to entry

When we asked industry leaders, founders and funders if they felt Philadelphia had enough resources to support entrepreneurs of color, they often answered quickly: No.

The phrase “barrier to entry” came up in nearly every conversation we had this month while covering technologists of color across Philly’s tech and entrepreneurship community. It’s not that there aren’t resources available, founders and funders told us, but it can be hard to find them, hard to know what move to make next, or impossible to participate in programs like accelerators if you aren’t able to work on your business full-time.

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That was the case for McKinsey Alston, founder of YOU LLC, a human resources and personnel, career and business consultant company.

Alston grew up in an entrepreneurial household and got to see how his parents made business and money decisions, he said. He also works as the managing director of talent, culture and organizational effectiveness at United Way of Greater Philadelphia and Southern New Jersey and is heavily involved with Philadelphia’s chapter of SEED SPOT, an organization that supports diverse, impact-driven entrepreneurs.

Alston’s been building his business while working and managing family responsibilities, and it’s been draining, and at times a lonely or isolating endeavor, he said. It’s how he learned to lean on a community.

“One thing I didn’t anticipate that SEED SPOT has really helped with is the mental drain on what entrepreneurship does to you, the dark place that starting a business can do to you,” he said. “If you don’t protect your mindset, you can go down a rabbit hole, and the only thing that can get it out is you.”

He’s experienced something he calls “the Philly shoulder,” a term for when he’s in a room full of entrepreneurs, and before he can even finish shaking someone’s hand and explaining his business, he’s hearing how it’s not relevant (i.e. they turn the cold shoulder).

And again, it’s not that there aren’t resources for founders of color out there, Alston said, but the challenge is being able to find them, and then how to tap in and actually use them.

Alston said he doesn’t believe this is a problem specific to founders of color — this process is hard and confusing for any entrepreneur — but that barrier to entry continues to be a hardship on folks who don’t have the financial ability to drop everything and participate in an accelerator, or go months without receiving a paycheck.

“There are some diverse leaders who can pay for that, but the initial thought is that you eliminate a lot of people by the price tag on it,” he said.

Access to capital

Finding funding to launch a business is a challenge we hear about again and again.

But it’s not an anecdotal challenge: On average, Black owners of new businesses in the United State raise 1.5% of total financial capital via outside equity, “while outside equity accounts for about 17[%] of total financial capital for white-owned new businesses,” Nick Frontino, the managing director at the Economy League of Greater Philadelphia, wrote Technical.ly in an email.

In February, Crunchbase published a look at venture capital and its pattern of overlooking founders of color. It’s “not a pipeline problem,” the site declared. The problem, it noted, is that VCs aren’t looking for underrepresented founders to forge deals with.

And the idea of a person of color starting a business in Philadelphia? That’s also statistically more challenging.

Ewing Marion Kauffman Foundation’s 2019 capital report found that out of all the venture capital funding spent in the U.S. in Q1 of 2018, 80% of it was spent in five regions — San Francisco, Silicon Valley, New England, New York City and Los Angeles.

"I think there seems to be progress to wanting to create resources, wanting to create space."
Martice Sutton

That means that cities outside of those five are competing for the residual 20% of funding.

“For some time, Philly’s been challenged by a well-documented limited availability of seed capital for local startups, particularly in the tech space, and this is especially true for entrepreneurs and business owners who are women and/or people of color,” Frontino said.

The Economy League has initiatives like Philadelphia Anchors for Growth and Equity and the Full City Challenge to address some of these gaps, and Frontino noted that there are other institutions in the city, like Backstage Capital, working to further expand access to capital.

But he acknowledged that there’s a need for more resources to help founders of color start and grow traditional businesses or social enterprises here.

“In a minority-majority city like Philadelphia, these barriers really limit economic growth and access to opportunity,” he said.

Prominent state-backed venture capital firm Ben Franklin Technology Partners’ director of strategic initiatives, Margaret Berger Bradley, essentially agreed, pointing out her organization’s diversity and equity initiatives, but also acknowledged that the city at large needs to create more inclusive networks.

“As a community, we have made great strides in paying attention to diversity but still need to continue to engender new habits and develop resources to build out more inclusive social networks, friends and family resources and capital,” Berger Bradley wrote in an email.

Finding success

While it can be harder for founders of color to launch their ventures here in Philadelphia, it happens every day. In general, women of color start new businesses faster than anyone else, and with the right tools, they can thrive.

Sutton now primarily runs Girls Gone Global in Atlanta, and that chapter sees more attention than the Philly one, despite girls in Pennsylvania needing it more, she said: There are just fewer local programs like hers.

While her business didn’t get off the ground here, at last month’s Economy League-hosted GPLEX, Sutton said she could feel the city wanting to change.

She’s hesitant to say that it has completely, but it might be on her way, she told Technical.ly: “I think there seems to be progress to wanting to create resources, wanting to create space.”

Alston is starting to see the light at the tunnel, too. He’s beginning to see what the last three years of work on his business have been for.

“I see the gains coming,” he said. “I love Philly, I’ve been here pretty much my whole life, and my goal is to stay here no matter what, but I had to piece it together myself.”

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