Written by Genevieve O’Mara and Kim Zeuli, ICIC
In 2014, JPMorgan Chase & Co. launched Small Business Forward, a five-year, $30 million initiative to support small businesses by connecting them to critical resources to help them grow faster, create jobs and strengthen local economies. In the first year of the program, nine organizations (most of them incubators and accelerators) operating in different markets were awarded funds to drive business growth in specific sectors, including biotech, cleantech, water technology, food processing and interactive media.
As a partner on Small Business Forward, ICIC conducted a comprehensive analysis of these nine organizations and the businesses they support in an effort to measure their performance and impact. The analysis included site visits, in-depth interviews with organization leadership and surveys of the businesses supported.
Nearly 1,000 small businesses provided with critical resources to create over 3,300 jobs
In 2014, the nine organizations supported 990 small businesses that raised nearly $185 million in capital, generated $139 million in revenue and received over 79 new patents. The businesses represent diverse entrepreneurs: 20 percent were owned by women and 23 percent were owned by minorities. The businesses employed 3,332 people, including approximately 20 percent local hires, and paid over $78 million in wages.
Observations on three practices that address barriers to growth for small businesses
The organizations employed a number of strategies to help their small businesses overcome the well-documented challenges to growth: lack of business knowledge, lack of access to capital and insufficient networks. We highlight three practices, implemented by some of the organizations, which stand out as being particularly effective.
Provide structured, frequent mentoring and rigorous business education
The organizations providing the strongest education support were those that offer structured, ongoing and frequent (e.g. weekly) mentoring sessions and rigorous business education programs.
– The Los Angeles Cleantech Incubator (LACI)’s executives in residence, all of whom are very experienced entrepreneurs, have weekly strategy sessions with the businesses they advise at LACI, providing highly individualized support that varies depending on the needs of each company.
– The New Orleans BioInnovation Center (NOBIC)’s commercialization teamoffers businesses personalized coaching through regular mentoring sessions. NOBIC also offers frequent educational seminars on business, legal, regulatory and fundraising topics.
– The Water Council in Milwaukee, Wisconsin, offers a 6-month bootcamp-style accelerator program called the BREW, which provides water technology startups with rigorous business training and mentorship, along with other resources.
Offer in-house equity funds or investment platforms to help with capital access
Accessing capital is important for all high-growth businesses, but especially those located in markets where venture capital is scarce. In-house funds or investment platforms provide businesses with a direct pipeline to capital that is right for them. This access is critical for women and minority entrepreneurs, who often face the greatest challenges securing capital.
– BioSTL in St. Louis, Missouri, has an investment arm called BioGeneratorwhich has invested in over 40 bioscience companies and typically serves as a catalyst for additional private investment.
– At its inaugural Water Venture Investment Conference in 2015, The Water Council launched the creation of a platform to connect its water technology businesses to global investors.
– LACI’s online funding platform called the California Global Innovation Exchange (CAGIX) allows investors to easily identify, research and invest in cleantech companies.
– QB3’s venture fund, Mission Bay Capital, invested in 21 biotech companies as of early 2015, almost half of which were incubated through QB3, located in San Francisco.
Connect businesses to critical customer networks
The most helpful support offered by the nine organizations, as reported by the businesses they serve, is developing customer networks. Developing a robust customer base can take an entrepreneur from a good idea to a business poised for growth.
– Eastern Market Corporation in Detroit, Michigan, provides food processing businesses access to over 45,000 customers each week at its public market and in neighborhoods across the city.
– Grand Central Tech in New York City, New York, connects its technology companies with corporate partners that serve as pilot customers during alpha and beta product development stages and as sales channels to other customers.
– Washington Interactive Network (WIN) in Seattle, Washington, organizes a business-to-business conference called Power of Play that gives interactive media businesses broad exposure to new customers and partners.
Connections to international customers are particularly important for some sectors.
– LACI’s Network for Global Innovation creates a global network of cleantech innovation institutes to help cleantech companies in Los Angeles reach international markets.
– The Water Council offers extensive international trade and export support for their businesses.
– WIN’s international business development program brings their companies to international conferences to connect with global customers and partners.
Small Business Forward is supporting place-based economic growth in critical urban markets
Over half of the nine organizations we evaluated are located in the inner city—in markets that have struggled to create equitable, sustained economic growth. Their success is driving community revitalization not only through job creation but by spearheading public infrastructure improvements and catalyzing local economic development. We highlight a few notable examples from the nine organizations we evaluated below.
Small Business Forward grantees create viable commercial districts by leveraging public and private capital
– BioSTL helped launch the CORTEX Innovation District, a 200-acre district in Midtown St. Louis that has attracted over $500 million in investment and $15 million in public infrastructure improvements, including streetscapes and a public park. It is projected that once fully built, CORTEX could represent $2.1 billion in investment, $100 million in public infrastructure improvements, and 13,000 new jobs.
– Eastern Market Corporation has attracted over $16 million since 2006 to renovate three formerly blighted large industrial buildings in Detroit’s Eastern Market District. It has also played a lead role in the $24 million Dequindre Cutinfrastructure project that is transforming an abandoned railway corridor into a trail that links downtown to Eastern Market.
– The Water Council renovated an old warehouse in Milwaukee to establish the Global Water Center, a $22 million project that catalyzed the development of a 15-acre brownfield site. The Water Council is also part of a broader project to develop part of the inner city Walker’s Point neighborhood into The Water Technology District, which has attracted over $211 million in investment since 2010.
The nine organizations receiving the first round of Small Business Forwardsupport demonstrate the tremendous impact incubators and accelerators can have in their communities—by growing new businesses and new industries, creating jobs and revitalizing their neighborhoods.