Submitted by The Initiative for a Competitive Inner City (ICIC)
Today, the Initiative for a Competitive Inner City (ICIC), and the University of Washington Foster School of Business’ Consulting and Business Development Center, with support from JPMorgan Chase, released a new report that affirms the approach of Ascend 2020, a promising new initiative to reduce barriers to capital and address gaps in support, and identifies the strategies needed to help entrepreneurs of color overcome the unique challenges they face stemming from structural biases in entrepreneurial ecosystems.
The report, Helping Entrepreneurs of Color Grow their Business, identifies disparities in business performance at a national level that indicate that entrepreneurs of color are not getting the support they need to grow their businesses. Minority-owned firms in the U.S. earn just 48 percent of the revenue of nonminority-owned firms.
Findings from the report also include insights into the early impact of JPMorgan Chase’s Ascend 2020 initiative as one model for supporting entrepreneurs of color. In its first year, Ascend 2020 helped entrepreneurs of color secure $2.9 million in loans and raise $2.2 million in equity, while small business owners reported the program’s education and mentorship services expanded their financial management skills (38%) and strengthened their understanding of their target markets (38%).
The report draws on earlier studies which have established that entrepreneurs—regardless of race or ethnicity—need three fundamentals to grow their business: management education, access to money (sufficient financial capital), and access to markets to sell their products and services.
“Our research provides further evidence that entrepreneurs of color face structural biases in accessing all ‘Three Ms’,” says Kim Zeuli, Senior Fellow, ICIC. “More needs to be done to fill gaps in support, particularly for businesses in high-growth sectors which offer the greatest opportunity for wealth building.”
Developed by the University of Washington Foster School of Business’ Consulting and Business Development Center and launched in 2017, Ascend 2020 supports collaborative partnerships of local organizations adopting the Three M framework for supporting entrepreneurs of color. Ascend 2020 is currently operating in six markets (Atlanta, Chicago, Los Angeles, the San Francisco Bay Area, Seattle, and Washington, D.C.), and plans to expand to additional cities.
“It’s not enough to consider issues related to money, markets, and management education in isolation—by addressing all three simultaneously, we are making accessible to entrepreneurs of color all of the resources they need to grow their business,” said Michael Verchot, Director of the Foster School of Business Consulting and Business Development Center at the University of Washington.
JPMorgan Chase is investing in Ascend 2020 as part of its $150 million Small Business Forward initiative to support women, minority and veteran-owned small businesses.
“Ascend 2020 is a critical piece of our strategy at a national level to create more pathways to success for underrepresented entrepreneurs,” said Ted Archer, Head of Small Business Forward, JPMorgan Chase & Co. “With its focus on partnerships at the local level, there is great opportunity for Ascend 2020 to move the needle in terms of expanding access to capital, building capacity and creating more inclusive, accessible entrepreneurial ecosystems.”
The report’s findings were informed by analysis of public and proprietary data sources, including data from inner city businesses tracked by ICIC and data ICIC collected from businesses participating in the first year of Ascend 2020. Policy insights from the report include:
Providing targeted support for larger, minority-owned businesses (not just small, early-stage businesses) is critical to maximize job creation and wealth building.
Capital access, especially to growth capital, may be the largest barrier facing entrepreneurs of color.
Expanding anchor and government contracting opportunities is critical for entrepreneurs of color, especially those in high-growth sectors.
Industry-specific incubators and accelerators need to make intentional efforts to be more inclusive of entrepreneurs of color and more of those focused on entrepreneurs of color should consider targeting a single industry.
The full report can be found online at http://icic.org.
About the University of Washington Foster School of Business Consulting and Business Development Center
The Consulting and Business Development Center accelerates student careers and grows businesses and jobs in communities where they are needed the most. Through the center’s programs, students build skills and gain experience in consulting and solving business challenges while business owners gain access to business education that creates jobs and changes lives. Combining academic rigor with business relevance our student consulting and business education programs produce bottom-line results for minority-, women-, LGBTQ-and other “diverse”-owned businesses and businesses in lower income communities. Founded in 1995, the Center has generated more than $200 million in new revenue and created and retained 200,000 jobs.
About JPMorgan Chase
JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $2.5 trillion and operations worldwide. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of customers in the United States and many of the world's most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.
About the Initiative for a Competitive Inner City
ICIC is a national, nonprofit research and advisory organization founded in 1994. Its mission is to drive economic prosperity in America’s inner cities through private sector investment.
The Initiative for a Competitive Inner City (ICIC) was founded by reknown Harvard Business School Professor Michael Porter in 1994 as a research and strategy organization that today is widely recognized as the preeminent authority on urban economic growth. ICIC drives inclusive economic prosperity in under-resourced communities through innovative research and programs to create jobs, income, and wealth for local residents. To learn more about ICIC, visit icic.org.