Entrepreneurial Support Organizations That Are Unlocking Economic Opportunity for Marginalized Entrepreneurs

Written by Kim Zeuli, EEP 

As the pandemic continues to exacerbate the systemic inequities that have created marginalized entrepreneurs, it has also drawn attention to the importance of entrepreneurial support organizations (ESOs) for business resilience and growth.

During the past seven years, the philanthropic arm of JPMorgan Chase has continued to invest in their small business initiatives (launched in 2015). Grant making under this umbrella has directed critical resources to ESOs dedicated to a shared mission of providing marginalized entrepreneurs with access to capital, technical support and guidance. During the pandemic, the ESOs were on the front line of a national, small business crisis, helping their diverse clients navigate a compounded set of challenges.

Our annual evaluation over the past seven years has captured the impact of a small subset (22) of the JPMorgan Chase ESO partners. Their cumulative impact across the seven years is remarkable: they have supported nearly 13,000 small businesses, providing diverse entrepreneurs with critical business education, connections to capital and access to markets to grow their businesses and create new jobs. The businesses have raised $1.7 billion in capital, generated $1.5 billion in revenue, created more than 31,000 jobs, and paid $1.1 billion in wages. The true impact is greater since this data reflects information collected through our survey and we do not achieve 100 percent response rates.

A Sustained Commitment to Addressing Economic Inequality in the U.S.

2021 Impact

In 2021, the Equitable Evaluation Practice (EEP) evaluated nine ESOs that represent different models of support. Some focus on a particular sector (e.g., food), others serve only a certain demographic of entrepreneurs and the remainder focus on place—entrepreneurs from underserved neighborhoods. The ESOs provide comprehensive support around business management education, capital access, market access, mentoring and networks.

Together, the ESOs supported over 1,800 businesses. Of those businesses included in the evaluation, and the 619 that responded to the survey, they raised $172 million in capital, generated $170 million in revenue, created over 3,000 jobs (filling 45 percent with local hires) and paid $113 million in wages.

On average, the ESOs supported a diverse group of entrepreneurs: 76 percent were entrepreneurs of color,  49 percent were women, 11 percent were military veterans and 16 percent were born outside of the U.S..

Supporting Entrepreneurs Through the Ongoing Pandemic

In our blog last year we shared reflections from the ESOs in our evaluation on how they navigated the pandemic and pivoted to help their clients. For many ESOs, this meant moving all operations online, modifying their programming and helping their businesses access emergency funding—quickly and often without additional staff resources.

Driving Growth Through Different ESO Structures

As part of our evaluation process, we organize three peer-learning events. During those that took place virtually over the course of 2021, the ESOs continued to discuss how they have retooled and pivoted, while also surfacing shared challenges: staff burnout, challenges with how and when to move back to in-person events, and how their programming might be changed in the long-run. We continue to be amazed by their tenacity and resilience! 

Their entrepreneurs are also impressed: 78 percent felt that the programing and resources they received from their ESO was ‘very useful’ in helping them grow their business. Since the pandemic started in 2020, 42 percent of those responding to our survey had reached out to their ESO for assistance. They reported receiving various types of assistance, including help applying for grants or loans—capital that was desperately needed by many small businesses to survive the pandemic. As we reported last year, the pandemic showed that support accessing capital was especially critical for entrepreneurs of color and women, who were not benefiting from federal relief to the same degree as other entrepreneurs, in a large part because of the weaker relationships they have with the traditional banks administering the programs.[1]

 The impact of ESO support was important for both the health of the entrepreneurs as well as the health of their businesses: giving them hope as an entrepreneur (60 percent), improving their emotional wellbeing (45 percent), keeping their business open (45 percent), and becoming a more resilient business (44 percent).

Entrepreneur Optimism

While the pandemic wore on through another year, the entrepreneurs responding to our survey were overwhelmingly optimistic: 74 percent expect to remain in business for a year or more. They were also surviving—only 25 percent reported that their business was not currently solvent. While this may reflect the fact that closed businesses and those in true crisis were probably less likely to respond to the survey, it may also indicate the power of ESOs to help those disproportionately impacted navigate the crisis.  

 

[1] Flitter, E. (2020, May 18). Few Minority-Owned Businesses Got Relief Loans they Asked For. Retrieved from https://www.nytimes.com/2020/05/18/business/minority-businesses-coronavirus-loans.html. Beer, T. (2020, May 18). Minority-Owned Small Businesses Struggle to Gain Equal Access to PPP Loan Money. Retrieved from https://www.forbes.com/sites/tommybeer/2020/05/18/minority-owned-small-businesses-struggle-to-gain-equal-access-to-ppp-loan-money/?sh=44b02e285de3.

Leaning in to 2022

As we start 2022, small businesses continue to navigate the pandemic as well as significant supply chain issues and labor shortages. For those that survived the worst of the pandemic, constraints on growth are this year’s major challenge. Unfortunately, we know entrepreneurs marginalized from small business ecosystems will be less likely to overcome the challenges and be less competitive in long run. JPMorgan Chase remains committed to changing this dynamic—in both the U.S. and globally—by sustaining their partnership with inclusive ESO partners. At EEP, we are equally committed to supporting this effort  globally by capturing impact and insights for both JPMorgan Chase and the ESOs they support.

Find insights from EEP’s evaluation of other entrepreneurial support organizations here.