St. Louis entrepreneurs face a $ 13 billion funding gap. This group wants to change that
When Michelle Robinson launched her vegan cosmetics brand DEMIblue Natural Nails in St. Louis two years ago, she struggled to fund it.
“I used a lot of my personal savings to fund the business start-up,” she said. “I just couldn’t really find funding resources at the time that would support the start-up costs and I didn’t want to take out big loans.”
This recently changed when Robinson secured one of six competition spots at the University of Missouri-St. Louis’ inaugural accelerator for diversity, equity and inclusion. It comes with a $ 50,000 non-dilutive grant that changes business. But these opportunities are rare.
Black and Latino business owners in St. Louis face a $ 13 billion annual gap between how much financing they need and what they can get. This statistic is one of many marked disparities described in a new report published this month this shows how the Saint-Louis region fails to support entrepreneurs of color.
National companies Next Street and Common Future, funded by JPMorgan Chase, partnered with local economic development leaders to assess the barriers facing entrepreneurs of color. They studied the disparities in nine cities across the country, including Chicago and San Antonio, and came up with ways to create more equitable small business ecosystems.
The new St. Louis report presents a set of solutions to reduce racial gaps in business ownership, income and employment over the next five years.
During a webinar earlier this month, Next Street Managing Partner Charisse Conanan Johnson said their research in St. Louis revealed big gaps between small businesses owned by people of color and their white counterparts.
For example, on average, white-owned businesses make more than 12 times more revenue than black-owned businesses and about double that of Latin and Latin businesses.
“It’s alarming, isn’t it?” Johnson said. “We want to build a more inclusive and equitable ecosystem and so it’s important for us to ground ourselves in the data about where we are today and how we then want to grow as we move forward.”
Johnson has worked with longtime economic development leaders Erica Henderson and Gabriela Ramírez-Arellano to assess the small business landscape over the past five months.
“The piece that is close to my heart is something that we already know – that Saint-Louis is very fragmented,” said Ramírez-Arellano. “But there’s actually a lot of collaboration between organizations, small business owners, and nonprofits. But it is not the responsibility of anyone.
She said this makes it difficult for entrepreneurs of color to find the local resources they need to start and grow their businesses. She said there is a major need for culturally and linguistically appropriate services, as well as funding, for entrepreneurs in underserved communities.
The report describes four action steps:
- Organize a coalition of funders to provide multi-year capital to build solutions that better support entrepreneurs of color.
- Identify the “ecosystem builders” – a handful of local organizations who can stimulate regional collaboration and be responsible for executing the plan.
- Formalize an advisory board of people who will foster collaboration and represent the needs of small businesses and the organizations that support them.
- Take immediate action on “fruits at hand” or areas where businesses urgently need support due to the COVID-19 pandemic.
Ramírez-Arellano said there has never been a better time to tackle equity concerns given how the pandemic has disproportionately impacted small business owners of color.
“The gaps are so obvious, it’s hard for anyone to say, ‘No, that’s not true,’” she said.
Ramírez-Arellano and Henderson are currently working to create a network of organizations that will collaborate to implement policies that better support entrepreneurs of color and hold each other accountable to reduce disparities in the region.
“The main objective is how do you give small business owners access – access to finance and access to technical assistance?” she said.
Ramirez-Arellano got funding from JPMorgan Chase, but she said they’ll need more philanthropists to get involved in order to tackle the work that needs to be done.
Read the report here:
Follow Corinne on Twitter: @corinnesusan