A new lifeline for inner city businesses
Reuters spoke to Mary Kay Leonard, CEO of the Initiative for a Competitive Inner City, a Boston-based national non-profit that educates investment-ready inner-city businesses about growth capital. The group last week held its seventh annual Inner City Capital Connections Program to match companies with capital providers in conjunction with Bank of America and Fortune magazine.
Q: What is ICIC?
A: ICIC is a national non-profit based in Boston. We’re basically a research and strategy firm focused on growing jobs in the most economically distressed areas in our cities. One of the issues we know that businesses in the inner cities face, especially smaller businesses, is the ability to access capital.
Q: Describe the Inner City Capital Connections Program.
A: We’ve tweaked it over the years, but essentially it finds strong and growing inner-city businesses that could grow more, but for capital. We bring them together for a full day of executive education that helps them understand what their capital needs are, and what’s the best source of capital. We do some coaching for them around how do you pitch for capital, because debt is very different from equity.
Q: What sources of capital are represented?
A: We bring a series of different kinds of debt providers and various equity providers – all styles of equity, all kinds of debt – we get together with them and give (companies) the opportunity to pitch, and if not get capital, get feedback on what their pitch is and their business model, so they can improve and come back next time. We have angels there, startup VC firms, mezzanine funders, buyout firms.
Q: What kind of outcomes are you seeing in terms of how many of the companies at the Connections event are getting funded?
A: We did a survey this year. Of the 275 companies that have participated, 94 had received capital for a total of $406 million, both debt and equity. Most importantly to us, those companies created 2,800 jobs. What’s even more amazing is that 40 percent of those new jobs that they created were for residents of the inner city.
Q: What is the scope of the businesses the come?
A: It really runs the gamut. They must have a least $2 million in revenue. We heard pitches from a company that provides dental services to low-income children, a company that provides logistics management to the federal government, a company that is designing and selling bike racks to cities across the world.
Q: Why is there a need for programs like this?
A: Many of these companies that just don’t have the national network. There is just no efficient way for the folks with capital and the people who need capital to find each other. Because of the local relationships that we have, as well as the national relationships that we have, we’re able to really bring together under one umbrella all of the options.
Q: What are some ICCC’s other functions?
A: My staff is about 30 people. We have a full research staff and they’re looking at the issues that are driving inner-city economies, both the positive job creators as well as the barriers such as capital. We also have people who advise cities on how to accelerate the growth of jobs and economies in the inner cities. We’re working very extensively in Detroit, for example, right now. And then we have a series of urban business initiatives. There are more opportunities in the inner city than one might think.
Q: How do inner-city businesses looking to tap your resources find you?
A: They could go to www.icic.org. We have a whole part of our website that is devoted to resources for small businesses. They can watch one of our Webinars, they can sign up for one of our programs. They can read good tips and insights from other businesses like themselves.