Entrepreneurship knows no bounds when it comes to innovation, determination, and potential for success. However, for entrepreneurs of color, accessing the capital needed to turn their ideas into thriving businesses has often been an uphill battle. In our ongoing commitment to fostering diversity and inclusive economic growth, we are thrilled to introduce the Entrepreneur of Color Fund (EOCF) for Dallas County, Texas, through generous support from JPMorgan Chase. This groundbreaking initiative aims to bridge the capital gap and empower entrepreneurs of color to build successful enterprises.
Our research sheds light on the persistent challenges that entrepreneurs of color face in accessing fair and inclusive capital for their startups and small businesses in Dallas. These barriers have limited their growth opportunities and hindered economic progress. Recognizing the urgent need for change, we have focused our efforts on creating the EOCF to bridge the capital gap and provide targeted financial support to entrepreneurs of color. The EOCF will play a crucial role in promoting equitable access to funding by offering tailored lending, products, and programs that address the unique needs of entrepreneurs of color. Through this fund, we aim to empower these entrepreneurs, foster their economic resilience, and provide them with the resources necessary for sustainable growth.
The EOCF in Dallas County
We worked in partnership with The DEC Network to conduct a study to evaluate the capital access needs of small businesses in Southern Dallas. The study involved surveys conducted over a period of several months, with active participation from 453 business owners in the region. Additionally, data from Community Development Financial Institutions (CDFIs), as well as other relevant sources such as the Dallas Small Business Ecosystem Assessment, were incorporated into the study. Following the surveying process, the research team embarked on the analysis phase, examining the survey results in-depth. Through this analysis, we derived key insights that guided the development and design of the EOCF, ensuring its effectiveness in addressing the capital access needs of entrepreneurs in Dallas County.
The existence of EOCFs in other cities has played a pivotal role in shaping and inspiring the design of the Dallas EOCF. These funds have served as powerful examples of how targeted initiatives can address the capital access challenges faced by entrepreneurs of color. By examining the successes and challenges of established EOCFs like those in Detroit, Washington DC, Chicago, San Francisco, and New York City, we have gained valuable insights into what works and what doesn’t when it comes to supporting entrepreneurs of color. This knowledge has helped us refine our approach and develop a more robust and effective model for the Dallas EOCF.
Our research findings gave us important insights on the significant problems faced by small businesses in Dallas County when it comes to accessing capital. We uncovered a series of challenges that contribute to the undercapitalization and disenfranchisement of these businesses. High decline rates and a general distrust of the capital access process emerged as major obstacles, with over 50% of businesses refraining from applying for loans due to a belief that they would not be approved. Additionally, businesses that were declined often lacked clarity on the reasons for the rejection, exacerbating the problem and perpetuating discrimination against BIPOC borrowers. These issues highlight the urgent need to change underwriting rules and establish transparent and inclusive practices to enable more businesses to qualify for the capital they need. Furthermore, the deep mistrust of the system underscores the importance of trusted connectors in the community who can facilitate access to capital and foster a more equitable and supportive environment for small businesses in Dallas County.
“The unmet need for lending amongst Dallas BIPOC business owners is not new to us. The research helped us recognize root causes that present unique hurdles for entrepreneurs of color (EOC) and focus our efforts on closing the capital and resource gaps through the development of a new lending product and program.”
Tarsha Hearns, Senior Director, The DEC Network
While we learned from other EOCFs, we also recognized the importance of tailoring our approach to the unique needs and concerns of the Dallas community. Each city has its own distinct entrepreneurial landscape, and what works in one location may not necessarily translate directly to another. By conducting local research and engaging with entrepreneurs and community stakeholders, we have gained a deep understanding of the specific challenges faced by entrepreneurs of color in Dallas. This understanding has allowed us to develop a more tailored and responsive EOCF that directly addresses the barriers and concerns identified within Dallas’s local ecosystem.
We established several goals to guide the Dallas EOCF initiative of supporting marginalized business owners in Dallas. These goals include developing an accessible and affordable capital product, serving low- to moderate-income and communities of color, addressing the underserved capital market, fostering on-the-ground accessibility, and providing support throughout the repayment period. By pursuing these goals, the EOCF aims to bridge the funding gap, reduce barriers to entry, and ensure the long-term success of marginalized business owners in Dallas. The EOCF is designed to address the following:
1. Targeted Financial Support
At the heart of the EOCF is the provision of targeted financial support. We understand that entrepreneurs of color often face systemic barriers when seeking capital. The EOCF aims to address this challenge by offering affordable loans, equity investments, and financial tools specifically tailored to the unique needs of entrepreneurs of color. By providing access to capital, we empower these entrepreneurs to bring their visions to life, create jobs, and drive economic growth within the Dallas community.
2. Holistic Support and Resources
The EOCF goes beyond financial assistance. We recognize that entrepreneurs need more than just funding to succeed. That’s why the EOCF also offers a range of holistic support and resources. From mentorship programs and business coaching to educational initiatives and networking opportunities, our goal is to provide Dallas entrepreneurs of color with the tools they need to thrive. By equipping them with knowledge, skills, and connections, we empower them to navigate the challenges of entrepreneurship and unlock their full potential.
3. Collaborative Ecosystem
The success of the EOCF relies on collaboration. We are actively seeking partnerships with community foundations, business support organizations, and other stakeholders in the entrepreneurial ecosystem. By working together, we can leverage our collective expertise, networks, and resources to create a robust and inclusive ecosystem that supports entrepreneurs of color. Through these collaborations, we aim to address systemic barriers, promote diversity and inclusion, and foster an environment where all entrepreneurs have equal opportunities to succeed.
4. Sustainable Impact
The impact of the EOCF extends far beyond individual entrepreneurs. By empowering entrepreneurs of color, we foster job creation, wealth generation, and community development in Dallas. These ripple effects contribute to sustainable economic growth and a more prosperous society. As the EOCF invests in entrepreneurs of color, it ignites a positive cycle of empowerment, reinvestment, and social impact that benefits not only the entrepreneurs themselves but also the Dallas community as a whole.
Join the Discussion and Take Action
To learn more about the study and the design of the Dallas EOCF, we invite you to read our White Paper, “Dallas Entrepreneur of Color Fund,” available at https://lnkd.in/eenFtepG. Additionally, we are hosting a live Discussion Series on July 19th, where The DEC Network’s Tarsha Hearns and CEO of EIC David Ponraj are joined by other EOCF partners to provide further insights about this initiative and share how you can get involved. Register for the event at https://lnkd.in/em93TyrE.
Conclusion
The Entrepreneur of Color Fund is a catalyst for change, driving economic empowerment, and breaking down barriers for entrepreneurs of color. By building back trust and access into the community, our goal with the Dallas EOCF is to create a more inclusive and prosperous entrepreneurial ecosystem. Together, we aim to create lasting change and opportunities for entrepreneurs of color in Dallas County. By supporting the EOCF, we can foster an inclusive and vibrant entrepreneurial ecosystem that unlocks the full potential of these talented individuals, drives economic growth, and builds a more equitable future for all.
About EIC
At Economic Impact Catalyst, our mission is to activate a world where there is equitable and inclusive access to entrepreneurship. We believe that entrepreneurship is the key to equitable and inclusive economic development. Our team’s main focus every day is to make it easier for founders to launch businesses in order to create wealth for themselves, for their teams, and for their communities. To learn more about our technology and market research solutions, built exclusively to catalyze entrepreneurship-led economic development efforts, book a call with us today.