In the wake of 2020, a look at the continued importance of JPMC’s Small Business Forward Initiative: Supporting ESO partners could be more important than ever
Written by Kim Zeuli and Nicole Dolcimascolo, EEP
The pandemic has both highlighted and exacerbated the systemic inequities that have created underrepresented entrepreneurs—entrepreneurs of color, women and military veterans, among others. It has underscored the importance of ongoing efforts like JPMorgan Chase & Co.’s Small Business Forward initiative (launched in 2015) to move underrepresented entrepreneurs to the center of small business support systems.
During the past six years, Small Business Forward has invested in a dynamic group of inclusive, entrepreneurial support organizations (ESOs) dedicated to a shared mission of providing underrepresented entrepreneurs with access to capital, technical support and guidance and unlocking economic opportunity and mobility. This year, the ESOs were on the front line of a national, small business crisis, helping their diverse clients navigate a compounded set of challenges.
Our evaluation of Small Business Forward over the past six years has captured the impact of a small subset (21) of their ESO partners. These ESOs have supported nearly 11,000 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 $1.5 billion in capital, generated $1.3 billion in revenue, created more than 28,000 jobs, and paid $953 million in wages.
In 2020, the Equitable Evaluation Practice (EEP) evaluated 11 ESOs that represent different models of support. Some select entrepreneurs from a particular set of industries, 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 (the four M’s—management education, money, markets and mentors).
Together, the ESOs supported over 2,500 businesses that generated $263 million in revenue, created over 3,800 jobs (including 40 percent in local neighborhoods) and paid $193 million in wages. Over half (52 percent) of the businesses were owned by people of color, 39 percent were owned by women, and 15 percent were owned by veterans. Although the impact in 2020 looks less than 2019, it actually reflects the fact that three fewer ESOs were included in the totals. In 2019 we evaluated 14 ESOs.
Access to Capital
Being able to access the right capital at the right time is critical for business resilience and growth and a perennial challenge for entrepreneurs of color and women. For example, one study found that even among higher revenue businesses, those owned by people of color were almost two times more likely to be denied credit than their White counterparts. The ESOs supported by Small Business Forward provide important education and support to help businesses get “capital ready” and successfully access debt, equity and grants. The ESOs also connect the businesses to lenders (banks and non-traditional lenders such as CDFIs), investors and grant makers. The results are significant: across the ESOs, the businesses raised over $280 million in capital last year. Of those that tried to raise capital, most were successful—77 percent for loans, 52 percent for equity and 49 percent for grants, on average. Additionally, of those businesses that did secure loans, 46 percent on average used traditional banks.
Supporting Entrepreneurs Through the Pandemic
As part of our independent, annual survey of the businesses supported by the ESOs, this year we included a section asking about the impact of the pandemic. This provides some unique insights into the power of ESOs to help underrepresented entrepreneurs navigate crises as well as the importance of doing so—from both a business and community development perspective.
Of the 675 entrepreneurs that responded to the survey this year (completed in July), 40 percent had received support from their ESO. Of those, 78 percent reported that the ESO support helped their business remain open and 94 percent said it gave them hope as an entrepreneur. Overall, 67 percent of the entrepreneurs reported that they remain optimistic that they will be in business “for many years” and only 23 percent reported that their business was not solvent. While this clearly reflects the fact that closed businesses and those in true crisis were probably less likely to respond to the survey, and because the survey was completed mid-year, it may also indicate the effectiveness of ESO support.
The ESOs also helped their entrepreneurs obtain federal emergency relief funds: 67 percent participated in the Paycheck Protection Program (PPP), which is just slightly lower than the 72 percent national estimate of small business participation rates. Additionally, nearly half of the ESO businesses (49 percent) received Economic Injury Disaster Loans (EIDL). As we learned over the course of the year, this type of support turned out to be 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.
The PPP and EIDL inequities also highlight why efforts to calibrate small business ecosystems in favor of underrepresented entrepreneurs—efforts like Small Business Forward—are so critical. If the recalibration does not happen, the ecosystems will continue to exacerbate inequities in business performance and wealth. Those that are not underrepresented will continue to receive a disproportionate share of all resources—in normal times and during a crisis.
These interventions also make a difference in creating economic opportunity in places, and for people, that need it most. The businesses supported by the ESOs not only build wealth but also create jobs. For 38 percent of the businesses, by mid-year they had to lay off or furlough employees (on average 4.2 employees per business). The entrepreneurs also shared the impact of the pandemic on their well-being, as well as their ability to care for their families. As the ESOs know, if these businesses fail, it often leads to decreased family health care, education and support for extended family members—making families less financially stable and less resilient.
ESO Navigation of the Pandemic
The ESOs, like all organizations and businesses, also had to navigate the impact of the pandemic—closing their offices and changing how they served their customers. They also had to contend with customers in crisis. For many ESOs, this meant moving all operations online, helping their businesses access emergency funding and changing and increasing their programming—quickly and without additional staff resources. We asked each ESO to reflect on how they navigated this year’s challenges and provide us with some examples of how they pivoted to help their clients.
BioSTL (St. Louis, MO)
“For some people, working from home is as simple as opening a laptop. It has been a little more complicated for companies working out of BioGenerator shared labs. (BioGenerator is the investment arm of BioSTL.) For a startup with limited resources, access to shared equipment is essential. Once scientists began working from home, many companies couldn’t afford to let valuable research languish during the pandemic. BioGenerator has loaned some equipment and machines to startup founders setting up home office labs to help companies continue their research at a critical time. Entrepreneurs are best at being flexible and solving problems, and BioSTL is encouraged to see so many startups continue to push through these challenging times and continue to develop innovation in St. Louis.” –Lindsey Harrison, Program Manager, BioSTL
Bunker Labs (41 cities across the U.S.)
“The foundation of Bunker Labs’ growth has been on community development. All of our original programming was centered on Face-to-Face interactions, which COVID upended in an instant. Leaning on our military backgrounds, we created Quick Response Teams to get rapid feedback and provide relevant on the ground programming and resources. These quick feedback loops enabled us to support over 190 companies in applying, securing, and/or seeking forgiveness for the Payment Protection Program and other capital programs to include pitch competitions and the like. Early on, we also recognized that any change to our engagement model was going to hit numerous hurdles. Instead of making the mistake of over-planning and delaying delivery of programming and events, we made a strategic decision to be biased towards action and rapid iteration. The approach is, obviously, taxing for the staff and potentially for our community, but the risks of no-action or slow reaction were far greater.”
–Leadership Team, Bunker Labs
Camelback Ventures (New Orleans, LA)
“As an ESO we – like the entrepreneurs we support – had to pivot in light of the pandemic and its economic implications. Consequently, we largely chose to “double down” on our investments by reducing the number of incoming businesses and using our existing resources to support our current portfolios. We have offered capital, capacity building opportunities and community-centered self-care programming. Ideally, these services and investments will help our ventures survive this unprecedented season. That said, we would be remiss to not mention that some of our companies are thriving in this new world of remote learning and remote work. Our support of their growth is equally as important as our support of the other ventures’ survival.” –Aaron Walker, Founder & CEO, Camelback Ventures
Eastern Market (Detroit, MI)
“Facing drastic crowd and vendor reductions to our Saturday market due to the stay-at-home order, we quickly pivoted to create an online sales platform with curbside delivery. Eastern Market’s Saturday Curbside program offers a produce box in order to provide a high volume sales channel for our small and medium farmers. We also added 80 percent of our value added vendors to the online market platform, incorporating everything from pierogis to pies. In the last six months, we have generated over 5,400 orders and sold over $210,000 worth of Michigan produce and value added products. Our Saturday Curbside program is one of the only curbside delivery programs in southeast Michigan that accepts SNAP and Double Up Food Bucks, making it fully accessible to all income levels.” –Christine Quane, Food Hub and Innovation Director, Eastern Market
ECDI (Columbus, OH)
“During normal times, ECDI fills the financial gap to provide opportunity for un-banked or under-banked entrepreneurs. In the months since the COVID pandemic upended nearly every sector of the economy, ECDI has worked tirelessly to address this gap and provide a lifeline for vulnerable businesses, on a greater scale than ever before. Since April, we have deployed more than $11 million in loans, a more than 300 percent increase over the same period last year. We recognized that our clients needed much more than just loan capital, so we launched a suite of programs and services to help businesses not just survive the crisis, but position themselves to thrive in a new economy. Enhanced offerings include access to virtual training and coaching, a panel of expert advisors, and technology and training to address the digital divide.” –Anna Parlet, Director of Development, ECDI
IHCC (Chicago, IH)
“At the Illinois Hispanic Chamber of Commerce (IHCC), our capacity to provide support to our community has been informed by our ability to directly connect with the business owners we serve. When it became clear that the COVID pandemic would have a significant impact on small businesses, our team called each of our members to find out how we could best help them and more than anything, listen. We heard that access to capital and emergency funding, specifically, was critical to their survival, so we worked closely with our banking partners to make sure small business owners understood the process and could access loans even if they did not have a previous banking relationship. In a similar fashion, through our partnership under the Cook County COVID-19 Recovery Small Business Assistance, we helped businesses in our community apply for business-sustaining grants. What was most effective in our outreach was our team actually taking it to the streets and walking down key Hispanic business corridors to meet business owners where they are.” –Liana Bran, Program Director, IHCC
LACI (Los Angeles, CA)
“In response to the pandemic, Los Angeles Cleantech Incubator (LACI) shifted all of our programs to be fully online, focusing on critical curriculum elements and individualized mentor support. The focus of the curriculum and guidance efforts centered on reducing expenses, expanding company runways, and finally, identifying pivot opportunities in a decimated market landscape. By doubling-down on our responsive and uniquely skilled pool of mentors/Executives-in-Residence, LACI helped 24 businesses within our Founders Business Accelerator (FBA) Program, including 10 graduates from the inaugural Cohort 1, to apply for relief funding, preserve jobs, create new jobs, and increase revenues as they deftly executed new business models. In fact, several teams pivoted so successfully that they reported a revenue increase during the second quarter 2020.” –Darien Siguenza, Program Coordinator; and Todd Hitomi, Project Manager of Founders Business Accelerator (FBA), LACI
Propeller (New Orleans, LA)
“The unprecedented circumstances brought about by this past year’s global pandemic confirmed the importance of collaboration within the entrepreneurial ecosystem and among small business owners. Collaboration encompasses many realms for Propeller, both internally and externally. Information flow and financial literacy are essential for small businesses to withstand the current, continued economic pressures and overarching uncertainty. Collaboration on city-wide informational webinars with local small business representatives and stakeholders provided free pivot guidance and application support, reaching over 1,000 participants. Between launching an Alumni technical assistance fund for loan preparation and capital eligibility to working with local entrepreneurial support organizations, lending institutions, and government officials to expand its impact to over 200 small businesses, we’ve further relied on partnerships to help small businesses with their most immediate need: capital. –Collective from Propeller’s Programs Team
Rev1 Ventures Columbus, OH)
“Whatever comes, Rev1’s mission remains unchanged: helping entrepreneurs build great companies. We saw COVID-19 as another risk for our clients and quickly set up a playbook and information hub focused on the company-building approach from our Startup Studio—Capital, Talent, Market, Business, and Product. We shifted all of our advisory and educational sessions to virtual and continued our boots on the ground work in advising our clients, helping dozens of them apply for and secure PPP funding. In addition, we worked closely with our partners at the City of Columbus and Franklin County to form and launch a $10.5 million Recovery Fund – also supported by JPMorgan Chase – focused on providing grants and low-interest loans to help underserved businesses get back on their feet.” –Kristy Campbell, COO, Rev1 Ventures
TechTown (Detroit, MI)
“At TechTown, we’ve always collaborated closely with other ESO’s and community development corporations to help our businesses and it was to this robust network that we first turned to ask the question, “How do we, as a community support our businesses now?” The 313 STRONG coaching collaborative brought together four CDFI’s, Accounting Aid Society and TechTown for targeted interventions for grantees of TechTown’s stabilization funds and borrowers from the partner CDFI’s. Not only was the joint effort to provide technical assistance innovative in Detroit, but its focus on skill development is influencing the evolution of TechTown programs and services across the board.”—Amy Rencher, Director, Small Business Initiatives and Entrepreneurship, TechTown
WBDC (Chicago, IL)
“In 2020, The Women’s Business Development Center (WBDC) has ensured small business owners have equitable access to resources and capital during the pandemic and jumped into action in March to immediately advocate for, and help businesses receive, financial support and technical assistance. To date, the WBDC has helped 2,434 small business owners access $59.7 million in government COVID-19 grants, which involved, among other efforts, creating a bilingual comprehensive applicant guide for SBA PPP and EIDL loans under the CARES Act, increasing one-on-one counseling hours by more than 50 percent since March and enhancing our 11 curricula by adding Survival, Recovery and Business Operations modules segments. –Lotika Pai, Managing Director, Access to Capital, WBDC
Leaning into 2021
2021 promises to be another challenging year for entrepreneurs, especially those marginalized from small business ecosystems. JPMorgan Chase remains committed to serving this group of entrepreneurs—in both the U.S. and globally—by sustaining their incredible ESO partners. This year, JPMorgan Chase extended their ESO evaluation to include three ESOs in the U.K. (Capital Enterprise, Hatch Enterprise, and Newable) and two in France (BPIfrance and Impact). We look forward to taking the lessons learned from this year’s pilot evaluation in the U.K. and France and continuing to improve and expand our evaluation, helping to document the incredible impact of Small Business Forward globally.