St. Louis Entrepreneurs Face A $13 Billion Funding Gap. This Group Wants To Change That
When Michelle Robinson first started her vegan cosmetics brand DEMIblue Natural Nails in St. Louis two years ago, she struggled to finance it.
“I used a lot of my personal savings to fund the startup of the business,” she said. “I just couldn't really find any funding resources at that time that would support the startup cost, and I didn’t want to take on large loans.”
That recently changed when Robinson secured one of six competitive spots in the University of Missouri-St. Louis’ inaugural Diversity, Equity, and Inclusion accelerator. It came with a business-changing $50,000 non-dilutive grant. But those opportunities are few and far between.
Black and Latino business owners in St. Louis face an annual $13 billion gap separating the amount of funding they need versus what they can secure. That statistic is one of many stark disparities outlined in a report out this month that shows how the St. Louis region is falling short on supporting entrepreneurs of color.
National firms Next Street and Common Future, funded by JPMorgan Chase, partnered with local economic development leaders to assess barriers facing entrepreneurs of color. They’ve studied disparities in nine cities across the country, including Chicago and San Antonio, and laid out ways to create more equitable small-business ecosystems.
The new report on St. Louis lays out a set of solutions to narrow racial gaps in business ownership, revenue 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 found large gaps between small businesses owned by people of color and their white counterparts.
For example, on average, white-owned businesses make over 12 times as much revenue as Black-owned businesses and about twice that of Latino and Latina-owned businesses.
“This is alarming, right?” Johnson said. “We want to build a more inclusive and a more equitable ecosystem, and so it’s important for us to be rooted in the data on where we sit today and how we then want to grow from here as we move forward.”
Johnson 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 keeps sticking out to me is something we’ve already known — that St. Louis is very fragmented,” Ramírez-Arellano said. “But there is actually a lot of collaboration happening between organizations, small-business owners, nonprofits. But it’s no one’s responsibility.”
She said that makes it hard for entrepreneurs of color to find the local resources they need to start and grow their businesses. She said there’s a major need for culturally and linguistically appropriate services, as well as funding, for entrepreneurs in underserved communities.
The report lays out four action steps:
- Organize a coalition of funders to provide capital over several years to implement solutions that better support entrepreneurs of color.
- Identify “ecosystem builders” — a handful of local organizations that can drive regional collaboration and be responsible for ensuring execution of the plan.
- Formalize an advisory council of people who will foster collaboration and represent the needs of small businesses and the organizations that support them.
- Take immediate action on “low-hanging fruit” or areas where businesses need support urgently due to the COVID-19 pandemic.
Ramírez-Arellano said there’s never been a better time to tackle equity issues, given how the pandemic has disproportionately impacted small businesses owners of color.
“The discrepancies 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 build out a network of organizations that will collaborate to implement policies that better support entrepreneurs of color and hold each other accountable to reduce disparities across the region.
“The main goal is how do we give small business owners access — access to funding and access to technical assistance?” she said.
Ramirez-Arellano has secured some funding from JPMorgan Chase, but she said they’ll need more philanthropists to get on board in order to tackle the work that needs to be done.
Read the report here:
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