Securing the bag
It’s no secret that funding is the largest challenge businesses of color face during their start-up phase. It’s a complaint the MSR has consistently heard from the more than 30 Black businesses profiled over the past year. Banks won’t finance them. Investors think the risk is too high. And, venture capitalists don’t think they are asking for enough money.
Social Impact Strategies Group (SISG) is looking to “disrupt” that conversation with its second annual ConnectUP! MN Summit, June 22-23 at the Wilder Center. The two-day gathering will connect nearly 150 “underestimated” entrepreneurs — people of color and women — with potential investors in order to create real access to funding opportunities.
The summit’s goal is to create a sea change of funding opportunities so that the next generation doesn’t face similar financial barriers to launch a viable business. Much like resources such as Metropolitan Economic Development Association, Northside Economic Opportunity Network, African Development Center and Neighborhood Development Center, “The overall goal is to create a well-connected, well-resourced and inclusive entrepreneurial ecosystem,” said Stephannie Lewis, SISG director of strategic partnerships.
“Capital is not our problem in Minnesota,” said Y. Elaine Rasmussen, founder of SISG, which provides social impact and economic development consulting and workshops for investors and women entrepreneurs. “We have plenty of money, it just needs to be activated in more sustainable and equitable ways.”
ConnectUP! applies the principle of “friending up” — making friends with higher social or economic statuses — to businesses. “A lot of founders of color and women founders have relationships across, down, but we don’t have relationships going up,” Lewis told the MSR. “And, those are really important to ensure that you can get the capital that you need and place you in front of those influential allies to ensure growth and success of your business.”
Rather than partnering with traditional capital sources, ConnectUP! has created an “ecosytem” that bridges the communication divide between entrepreneurs and nontraditional investors, including individuals and incubators, to provide lower-level financial and mentoring opportunities.
“Those relationships are critical for business growth and scale,” she said. “In order to exchange capital, there has to be trust, [and] that trust only comes through developing a relationship.”
Noting that relationships go beyond just sitting in a room, the summit’s first day is set to focus on educating both sides via 45-minute breakout sessions led by finance-savvy speakers, including keynote speaker Clarence Bethea, Upsie founder/CEO; Elizabeth Tolzman, Ramsey County’s director of policy and planning; Alex West Steinman and Liz Geil, The Coven co-founders; Lance Knuckles, SISG integrated capital fund fellow; and Mark Watson, managing director of Boston Impact Initiative.
For entrepreneurs, sessions will include how to take a business from a side hustle to a full-time venture, access tools and resources, crowdfunding, and how to navigate and negotiate the capital landscape.
Investors will also go through an education track, including angel investing, “as many do not have a clear understanding about some of the businesses that people of color run,” Lewis explained. For example, a White investor may not understand the market need or innovation for a hair product or ethnic food service.
“Because they don’t have deep, meaningful engagement [and] relationships with people of color, that’s not a part of their purview.”
Those kinds of relationships, she said, are a privilege to which many White men already have access.
“White men fail on their own merit — not because they don’t have access to resources or because they don’t have an influential ally. I don’t want anybody to fail, but if you’re going to… fail like White men…fail because you just did not have a good business idea or because you didn’t have good follow-through — not because you were undercapitalized.”
The second day of the summit will put those relationship-building skills in action with group networking and pitching. There will also be a “Garage Startup” investment component in which investors can hear a pitch and decide on the spot whether to give an entrepreneur $100, $200, up to $1,000. “You can literally walk out with money in your hand from the conference.”
But, even if attendees don’t get those fast bucks, Lewis said to still expect to walk out with resources. “Expect to walk away with a phone number, at least one connection and concepts and ideas that you can immediately apply to your business.
“The investors and influencers attending the summit have more value beyond their access to capital,” Lewis continued. “They can serve as mentors and the bridge to others that may have an investment lens that aligns with your business, because having those connections is honestly more valuable than capital.”
“Even if they do not want to make the investment,” Lewis continued, “they can act as your mentor, and then they can introduce you to other people, because having those connections are honestly more important than capital, in and of itself.”
This relationship model helped one business generate an estimated $10K in revenue immediately following last year’s inaugural summit. Other businesses established ongoing mentorships with investors to develop strategies. In addition, attendees received more than $10,000 in pro bono legal and accounting services. Lewis also said that the summit actively seeks opportunities to use or purchase registered businesses products and services.
That means entrepreneurs, she said, should come ready to work and get noticed.
“You need to be able to talk about your business at a moment’s notice,” said Lewis. “If you don’t know how to do that, we’re going to get you to that place so you can talk to the people that you need to talk to with boldness.”
ConnectUP! MN takes place June 22-23 at the Wilder Center, 451 Lexington Pkwy. N. in St. Paul. Businesses interested in attending must be for-profit and have generated revenue within the past 12 months. To register, visit connectupmn.com.
Stephenetta Harmon is a Black beauty editor, curator, and digital media and communications expert who builds platforms to celebrate the power, impact, and business of Black beauty. She is the former EIC for Minnesota Spokesman-Recorder (2018-19) and current host of MSR Forefront, a digital roundtable series. She is the founder of Sadiaa Black Beauty Guide, the premier directory dedicated to Black-owned hair and beauty businesses. Find her at stephenetta.com.