A Need for Capital
Advising and education work really well to help our companies’ businesses grow, but these services alone are not sufficient. Companies still need capital to grow—this is their biggest barrier to scale—and yet the amount and type of capital available to good small businesses is elusive.
Entrepreneurs need support to review the financial documents they are preparing to access capital, identify where on the path they are, and get feedback they can act on to help them secure funding. Banks and other capital providers speak a specific language, and it’s important to teach entrepreneurs how to communicate it.
But we also need to increase the sources of capital. Investors and bankers need people who can walk in the shoes of the entrepreneurs and who are willing to take the extra time needed to assess their character and commitment. Because that due diligence was already part of our selection process, we recognized our potential role as a conduit between job creators, investors, and the local community and created a new investment vehicle to fill the gap. Fund Good Jobs was born as an ICA partner to provide high-growth small businesses with capital they need to scale up and maximize good job creation.
Structured as a not-for-profit venture, the goal of the fund is to secure capital that goes directly back into ICA to support our mission. While we have obligations to pay back our philanthropic investors’ program-related investments (PRIs), any and all additional returns are invested back into supporting Inner City Advisors and Fund Good Jobs operations. That is, our “return” is first and foremost tied to the creation of good jobs throughout the Bay Area. In order to be successful, the relationship between Fund Good Jobs and ICA is thereby critical—the investment capital needs to be leveraged with operational support for Fund Good Jobs and ICA.
Jobs for Those Who Need Them Most
Our work is guided by the belief that economies work best when everybody can participate productively in them. In the evolution of our economic development work, we’ve learned that we must not only raise the standard of job quality to provide good pay, benefits, and life ladders of opportunity, but that we must also prioritize the creation of good jobs for people with higher needs to advance economic inclusion. For us, that means people who are formerly incarcerated, immigrants and English language learners, aged-out foster youth, and people with low education attainment levels.
We’re now implementing a new talent management program to bridge the gap between workforce development agencies and small business needs, help people with higher needs become better prepared for specific career pathways, and ultimately save businesses significant costs through custom training and wage subsidies to incentivize the hiring of target populations.
In 2012 alone ICA created and retained 2,602 good jobs and generated $93,415,611 in wealth. Of the companies we work with, 59 percent are owned by women, 48 percent are owned by people of color, and 73 percent hired workers with barriers to employment. Our portfolio companies pay an average hourly wage of $18 and an average salary of $47,994, and 83 percent offer health and dental benefits. We’re doing our part to increase livable wages that move people from subsistence, to bigger savings accounts, to building long-term assets.
A Growing Investment in Scale
Leaders in business, government, philanthropy, and the nonprofit sector should recognize that there is an abundance of programs geared toward helping people start a business, and they’ve been very successful in stimulating venture birth. The focus, now, must be on accelerating venture scale. Stagnant ventures will sabotage the success of any long-term job creation strategy, and if more resources aren’t allocated toward helping entrepreneurs hurdle their biggest barriers to growth, most of the gains made by the start-up support ecosystem will be lost as more businesses close down.
The good news is that right now we can refocus our investments on scale. As members of this entrepreneurial ecosystem of support, we must evolve together and collaborate more intentionally and authentically toward a shared goal to maximize good job creation for people with higher needs. We must understand how each of our organizations fit together in a continuum to support local businesses, and then meet the needs of each business in concert with each other. Our collaboration is key to yielding more impact.
In the last decade, more organizations have caught on to investing in the acceleration of business scale as a successful long-term job creation strategy. Jumpstart Cleveland, Endeavor, and Memphis Fast Forward are great examples. These organizations’ initiatives, fundamentally based on collaborative partnerships like ICA, work by bringing together existing entrepreneurs, investors, regional government leaders, philanthropists, and economic development professionals to support high-impact small businesses through the critical stages of scale by providing a comprehensive array of services and resources.
We must also focus much more attention on enriching the regional labor pool. Talent is an essential aspect of an effective ecosystem and the most vital resource to the success of any venture. It will be pivotal to build a bridge between local businesses and workforce agencies that are doing great work to prepare people for employment.
In focusing entrepreneurship policy on scaling high-impact businesses, we can ensure the long-term success of our job creation strategies. When people earn higher wages, they have the capability to invest in their own neighborhoods. And when we prioritize the well-being of people with higher needs and connect them to good jobs, they become the catalysts for increased economic activity, safer neighborhoods, improved health, and better education. This is how we all begin to win.
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