Expanding Opportunity through Inclusive Entrepreneurship: Detroit Startup Week Recap

On May 23rd, ICIC released our newest report, Creating Inclusive High-Tech Incubators and Accelerators: Strategies to Increase Participation Rates of Women and Minority Entrepreneurs, in partnership with JPMorgan Chase and Co., at a panel called Expanding Opportunity through Inclusive Entrepreneurship at Detroit Startup Week. Moderated by Janis Bowdler, Head of Small Business Initiatives within Global Philanthropy at JPMorgan Chase & Co., the panel included Kim Zeuli, ICIC’s Senior Vice President and Director of Research, Ned Staebler, CEO of TechTown, an incubator and accelerator in Detroit, and Ray Waters, President of Detroit Development Fund. The following is a summary of their conversation.

Janis Bowdler: Kim, to kick off the conversation, we started our research with this question – “Are the tools and resources incubators and accelerators offer available to a wide array of entrepreneurs?” – and we kind of had an inkling of what the answer might be. Tell us a little bit about what you had to do and what your early findings were.

Kim Zeuli: Our first course of action was to go out there and try to find data. There wasn’t any. So we wound up interviewing over 75 experts and leaders in incubators and accelerators to really explore this issue, and all of them said the same thing: “This is a real concern. We need to increase diversity in our own organizations, in other incubators and accelerators, and especially in the high-tech sector because we want to see more women- and minority-owned businesses in the high-tech sector.”

Incubators and accelerators are a great model. They supply what entrepreneurs need most: education, expanded networks and access to capital. There’s some new research out there showing that it’s actually women and minority entrepreneurs who benefit the most from incubators and accelerators, so it’s a real concern if they’re not gaining access. We identified four barriers that are preventing women and minorities from accessing them: recruitment, selection bias, program design and culture. The recruitment and the selection biases are preventing women and minority entrepreneurs from gaining access, but the program design and culture are actually making them not even want to go there.

JB: Ned, I’d love for you to talk about your experience here in Detroit. Is this a challenge here in Detroit or do you have it all figured out?

Ned Staebler: This is an issue that we’re very intentional about because I’m a big believer that if we’re going to have a real, sustained recovery here in Detroit it can’t be isolated to the 7.2 square miles of Downtown and Midtown. So we’re really intentional about trying to be more representative of the community that we serve. People walk in the door if there are people that look like them that are working, teaching and leading here. Our diverse staff also help with our recruitment and networks.

You also have to get out of the building a lot. We have a pretty newish building next to a university and a health system. And that’s great, but there are a lot of people across the city that say, “I didn’t go to university or I’m not all that high tech.” And so we try to meet entrepreneurs where they are.

JB: Ray, Detroit Development Fund also has this frontline view, and, in particular, with having launched a fund dedicated specifically to entrepreneurs of color, you have this unique view into what have been some of the challenges that your clients are experiencing. Can you share some of what you have seen?

Ray Waters: JPMorgan Chase has been kind enough to fund our Entrepreneur of Color Fund. We started this in November and it’s interesting to note that it’s gaining some traction. We’ve now done 18 loans for $1.35 million. We have three more approved for $400,000 and 12 in the pipeline for another $800,000. It is designed to help grow minority-owned companies in the city of Detroit. What we’ve found with this fund is we have the capital, so there’s access to capital.

The issue is, how do we get companies ready for this? Many of them come to us without their financial statements, and they don’t have a good marketing plan or business plan. So we partner with people like TechTown. We support two companies that came out of their Retail Boot Camp.

JB: Kim, there were a number of best practices that you were able to observe in your interviews that might be good lessons for us all to take in. Do you want to share some of what we found in that regard?

KZ: We found great examples of incubators and accelerators who were getting it right, and one of those is TechTown. We grouped the best practices into four categories addressing the four barriers. One is expanding those recruitment networks. That’s key to what Ned was talking about, leveraging diverse leaders within the organization or through diverse partnerships. And then it’s creating that diverse selection committee and adjusting the selection process, really streamlining that process and adjusting it so that we can get rid of intentional and unintentional biases. And then there’s creating and designing a program that meets the needs of women and minority entrepreneurs instead of the young, white male entrepreneur who can be very mobile, and can go and stay and camp out someplace for three months. And then finally it’s creating that inclusive culture and image to make sure that you’re encouraging more applications from diverse entrepreneurs.

JB: Ned, since you were mentioned as a best practice, I’d love for you to expand a little bit more on what you’ve done.

NS: When you come in and look at our clients, 50-60% of them are not white, and just over 40% are women. It’s completely intentional because we’re really working on being more representative of our community. We also have what we call BLOCKS, which is the Retail Boot Camp that Ray mentioned earlier, and we have a program called SWOT City, where we’re out in six different neighborhoods around Detroit. We think it’s really important because our goal is not to strengthen Midtown Detroit. Our goal is to strengthen the leaders, the entrepreneurs, and the economy of the greater Detroit area.

JB: Ray, this was really important to how you have done business as well, making sure that, in particular, when we launched the Entrepreneurs of Color Fund, that people knew about it. Can you talk about how you address those issues?

RW: The mayor’s office was very helpful in that. So our first step was we had the press release, and we had a big event and invited pretty much everybody we knew. But after that we began meeting with the Chambers of Commerce. And then the other way, which Ned talked about, is we get out more. I have I think nine team members now, and we probably attend between all of us 100 events a year and talk about what we do.

JB: Ned and Ray, why is this so important in a place like Detroit?

NS: As Detroit grows, we have a chance to make sure the growth is inclusive and that everyone gets to participate in it. There’s a lot of data that says when you talk about diversity it’s not for the sake of diversity, it’s because you get better outcomes with diversity. I mean, that’s something people sometimes forget with the altruism of “Oh, we should be inclusive and diverse” that, no, we want things to work better.

RW: It’s our belief that the small business companies in Detroit will be the backbone of Detroit as we move forward. They’re the ones that will grow and create jobs. There are some companies that create five or six jobs, but when you add all of our companies together and you start talking 1,000 jobs, all of a sudden it makes a difference in jobs and wealth for Detroit residents.

To learn more about the barriers and strategies for creating inclusive high-tech incubators and accelerators, read our report, Creating Inclusive High-Tech Incubators and Accelerators: Strategies to Increase Participation Rates of Women and Minority Entrepreneurs.