Portland, Oregon (AP Photo/Don Ryan)
Often referred to as the “Whitest City in America,” Portland, Oregon, has made concerted efforts in recent years to support its burgeoning minority entrepreneurial class. Last August, the Portland Development Commission set out to raise $3 million for its new Inclusive Startup Fund aimed at fostering minority business growth in the city — positioning Portland as a leader in shaping an ecosystem earmarked for demonstrable inclusive innovation.
Fostering wealth creation within communities of color and low-income neighborhoods is a key lever amid the city’s goals of becoming the most competitive and equitable city in the world as it grows.
“This administration has found itself in a robust economy but recognizes that it is one not everyone is fully participating in,” says Jillian Detweiler, Portland’s policy director. “We’ve focused the work of the Portland Development Commission on avenues to share prosperity.”
The Inclusive Startup Fund started out with $500,000 from the city and Multnomah County, and $250,000 from the state. The goal is to raise a total additional $1.75 million from private partners. The fund will provide increased access to capital for underrepresented entrepreneurs, expand the local pool of angel investors of color, and encourage the existing venture capital community to invest in diverse founders.
“The number of black and brown people in the city has grown almost 15 percent since the last census period. People under the age of 25 are almost 50 percent people of color,” says Stephen Green, community director at Elevate Capital, the venture capital firm selected by the city in January to manage the Inclusive Startup Fund. “We’ve got this growing cadre of people and we’ve got to leverage them, make opportunities for them and think about the barriers that would keep them from succeeding as founders.”
Thus far, nearly 70 entrepreneurs have applied. Accessing money from the fund will be no different from the traditional venture capital process with aspiring startups getting vetted through an online application process and pitching their business to potential investors.
Stephen Green, community director at Elevate Capital (Photo by Kersten Green)
According to Green, Elevate is looking for extremely driven founders early on in their business (generally pre-revenue) with a strong idea of their value proposition and an understanding of how they will gain traction and grow. Seed capital investments will be given up to $100,000, but more importantly, founders will gain access to highly experienced mentors who are also from diverse backgrounds.
“We’re investing in great founders and businesses with great ideas and teams. In this type of investing, more important than the money is the mentorship and technical assistance. This way, when selected founders do receive funding, they’ll know how to use it to create a sustainable business,” says Green.
Portland is not unique in its acute lack of investment in underrepresented business owners. Historically, investment dollars for black, Latino and women founders has been bleak on a national scale, despite trends reflecting that members of these communities create businesses at up to three times the rate compared to their white counterparts.
There are more than 15,000 minority-owned businesses in the greater Portland metro area according to 2012 census data. Enterprises range from sneaker shop cafes to small tech companies to beauty supply stores. Representing only a fraction of the city’s overall population — roughly 24 percent — people of color have long since felt the second-class citizenship of the innovation economy exacerbated by ongoing gentrification, increased costs of living and displacement, and a near invisibility in the city’s bustling technology startup community.
Other Portland initiatives seek to connect historically disadvantaged populations with pathways to economic mobility too.
The Startup PDX challenge, a three-year-old initiative, is an annual competition where winners receive up to $25,000 in low-interest funding, free co-working space for a year, access to business advisors and free legal, marketing and talent recruitment support. Project Increase provides coaching and education designed to support small business owners of color with growth planning. Thus far, the program has graduated 11 businesses ranging from manufacturing to retail. The Small and Microenterprise Business Development Program financially supports organizations providing technical assistance in Portland’s traditionally underserved communities like Southeast Portland and the Jade District.
Green strongly believes that Portland is uniquely positioned to scale funding and resources more effectively to underrepresented groups given its smaller size compared to large markets like New York, Atlanta and D.C., which boast large populations of black and Latinos. In his opinion, Portland’s smaller demographic of people of color creates tighter, supportive business ecosystems, making it easier to monitor successes and stick out on a national scale.
“I’m benefiting from being connected to this diverse entrepreneurial ecosystem in Portland and breaking stereotypes within industries where we’re underrepresented,” says Bertony Faustin, Oregon’s first and only black winemaker. “It shows the next generation that this is possible. And that there’s ongoing support to help them get started.” Faustin is partner and manager of Abbey Creek Vineyard, a vineyard he inherited from his in-laws when he moved to Portland from Brooklyn 15 years ago.
Portland’s leadership recognizes the need to compete globally by ensuring entrepreneurs of all backgrounds and stages in their business are supported. Healthy companies, in turn, create high-quality, middle-income jobs, and encourage a healthy diversity of people to continue to call Portland home.
“We want founders to be able to make a living from what they do. We want them to be able to create quality jobs for others in the community and we would like them to be part of our exports so that they can really grow,” explains Detweiler. “The local economy is finite, so helping them to find paths to a bigger market would be a measure of success which in turn helps the entire city and state.”