Firms in central city get boost
Program aims to help them grow
Fifty Milwaukee companies have signed up for a new program aimed at helping central city businesses grow through capital investments.
Participants in Inner City Capital Connections include businesses from Milwaukee’s north side, where community leaders have sought economic growth as a way to ease a high jobless rate and social unrest.
“Given what happened in Milwaukee (in August), we have doubled our efforts to ensure that businesses in Sherman Park are aware of the program,” said Hyacinth Vassell, Inner City Capital Connections director.
The program is part of the Initiative for a Competitive Inner City, a Boston-based nonprofit created to help build wealth in economically
distressed areas.
Monday, the nonprofit will be at University of Wisconsin-Milwaukee for a conference that launches the capital-raising effort for the 50 businesses.
It could take a couple of years or longer for the businesses to realize the results.
“This is not a one-shot deal. You can’t change and revitalize a business ecosystem in one year. It’s probably going to take three-to-five years minimum,” said Steve Grossman, chief executive officer of the Initiative for a Competitive Inner City.
Locally, the program is being sponsored and paid for by donations from companies and community leaders, including Robert W. Baird & Co., Brady Corp., Park Bank, the Greater Milwaukee Foundation, Bader Philanthropies, Barry Mandel, Katherine Gehl and Bill Krugler.
Much of the emphasis is on growing businesses that create jobs in a part of the city that has the highest unemployment rate.
“Good jobs that lift people out of poverty will have a big impact on a lot of the social issues we face,” said Krugler, who spent 30 years in the private equity industry and now runs a nonprofit called Milwaukee JobsWork.
Initiative for a Competitive Inner City was founded by Harvard University professor Michael Porter, who will be at Monday’s conference.
The organization most recently launched its Inner City Capital Connections program in St. Louis, Chicago, Philadelphia, Los Angeles and other cities, in addition to Milwaukee.
Milwaukee community leaders have worked with Porter before on a plan to create business opportunities in the central city.
Critics said not much came from that effort, called the Initiative for a Competitive Milwaukee, which was launched more than a decade ago.
Inner City Capital Connections is different, Grossman said, because it’s focused on helping the 50 selected businesses raise money for growth.
It’s not a social services program.
“This is about the free market and the flow of capital. Nobody lends money unless they think they’re going to get a return on their investment,” Grossman said.
The target audience for the program, which is free for participants, is established companies with $500,000 or more in annual revenue.
To qualify, the companies are supposed to be located in an economically distressed area or have 51% or more of their operations in the area. They can also have 40% or more of their employees residing in a distressed neighborhood.
It’s an intense program, Grossman said, that teaches business executives how to finance growth and make connections with sources of equity and debt capital.
“So often, these entrepreneurs are stuck because they haven’t had that training and coaching,” he said.
Mentoring part of plan
Monday’s conference will be followed by online seminars, coaching and mentoring from people experienced in smallbusiness growth.
It takes about 40 hours, over several months, to complete the program.
Then, participants are invited to a capital-matching conference in New York where they make their pitch to investors.
“By the time they graduate, they will be ready,” Grossman said.
Clifton Phelps, co-owner of JCP Construction, is one of the participants.
The company’s first projects were relatively small, but more recently it’s done work for the Northwestern Mutual tower, Mitchell International Airport and Lambeau Field.
Phelps said he wants to increase his business contacts through the program, even if he doesn’t apply for funding to expand his company.
These types of programs, he said, allow business owners to “put their shield down” and have candid discussions with their peers.
The African American Chamber of Commerce in Milwaukee has a revolving loan fund for small businesses.
“But we are always open and ready to collaborate with other efforts as long as, at the end of the day, there’s a true impact on business growth,” said Eve Hall, Chamber president and CEO.
Gehl, former president and chief executive of Gehl Foods, asked the Initiative for a Competitive Inner City to bring its program to Milwaukee.
“I think we are very fortunate. It’s not in every city,” Gehl said.
She likes the program because it addresses a specific problem, which is that business owners don’t always know how to attract additional investors.
Even if someone is successful in running a company, Gehl said, acquiring capital requires a different skill set.
She also favors a private-sector approach to business issues.
“Government certainly has a role to play in economic development. At the same time, government can only do so much,” Gehl said. “If we really want to drive economic prosperity and create opportunities across the entire Milwaukee metro area, including our inner cities, we need private investment.”
Since its inception 11 years ago, Inner City Capital Connections has worked with 1,120 companies, across the nation, including 837 that have raised $1.32 billion in debt and equity capital. Those companies have created more than 11,000 jobs, according to Grossman.
The program helped 100 Chicago companies raise more than $80 million in capital, resulting in the creation of 423 jobs, he said.
Hopefully, Milwaukee will have similar results, said Jerry Roberts, program officer at Bader Philanthropies.
“I think that would be good. We have to look at all of the opportunities and see what works. There’s no tried-and-true way to get these things done,” Roberts said.
The program’s focus on matching investors with central-city companies is promising, according to the Milwaukee sponsors.
“They have a history of working with larger companies … and helping people understand there are markets in central cities for both business development and growth, and also to recruit employees,” said Ellen Gilligan, president and CEO of the Greater Milwaukee Foundation.
“Their whole focus has been on location, location, location, with the idea that central cities are great places to locate companies,” Gilligan said.
If Inner City Capital Connections produces strong results in Milwaukee in a couple of years, it could be continued.
“If we can’t show results, in terms of business growth in revenue and jobs, then I won’t come to (sponsors) for year three,” Grossman said.