Cincinnati’s Secret Sauce to Help Minority Businesses Succeed
WHY YOU SHOULD CARE
Because this Midwestern city's model for building up minority businesses is being adopted in 20 cities nationwide.
By Nick Fouriezos
Like so many tragic stories these days, this one began with an unarmed Black man killed by police over traffic violations. It was April 2001, and mass protests arose in the Over-the-Rhine district of Cincinnati, leading to the most destructive U.S. riots since the 1992 Rodney King riots in Los Angeles. Still, with the community reeling, a number of positive reforms emerged in the protests’ wake — particularly, the Minority Business Accelerator, a task force created in 2002 that was dedicated to building scalable companies of color.
Now, nearly two decades later, the MBA has 40 African American and Hispanic firms, each earning more than $1 million in annual revenue, under its wing — generating more than $1 billion in yearly sales and over 3,500 jobs, with plans to double both those statistics by the end of 2022. It’s part of a broader environment dedicated to building up minority entrepreneurs. Among the country’s top 10 cities where minority entrepreneurs are succeeding:
Cincinnati has the highest percentage of minority businesses that make more than $500,000 annually and have been in operation for more than six years.
That’s according to analysts at Lending Tree, in a study published last year. And Cincinnati stands out. Other Midwestern cities fared poorly, with St. Louis, Milwaukee and Cleveland ranking among the nation’s worst.
Cincinnati succeeds in part because it has matched minority-owned supply companies with its top science and research companies, from Johnson & Johnson and the Cincinnati Children’s Hospital Medical Center to Procter & Gamble. From its perch within the city’s chamber of commerce, the MBA often finds minority businesses making in the low millions annually and connecting them “with the buying power of that regional or national organization, building their revenue to $20, $30, $40 million or more,” says MBA Executive Director Darrin Redus.
There’s another factor that’s helping minority businesses. “More corporations than ever have diversity and inclusion plans … but are increasingly challenged to find minority firms of size,” Redus says.
Another strategy the accelerator uses is finding healthy companies looking for buyers and handing over leadership to minority entrepreneurs — allowing an interracial transfer of wealth almost seamlessly. “We can literally create minority firms of size via acquisition,” Redus says. The MBA strategy has worked so well that it’s been awarded a $450,000 grant from the Kaufman Foundation to build a playbook so other cities can replicate its results, with 20 different cities currently mirroring the Cincinnati model.
To be sure, Cincinnati isn’t some ideal beacon of diversity. It ranks below cities like San Francisco, New York and Atlanta in percentage of self-employed minorities (just 3.1 percent). Smaller companies led by people of color appear to struggle in particular, a trend that aligns with the findings of an independent study by WalletHub.
That paints a picture of a city that’s successfully pushing medium-sized companies to great heights but is struggling to get minority entrepreneurs to the starting line in the first place. Being in the Midwest, “there are just a limited number of funds and angel investors, which have huge concentrations on the coast,” says Candice Matthews Brackeen, founder and CEO of Cincinnati-based Lightship Capital.
Still, that weakness is being addressed. In 2014, the MORTAR startup accelerator was founded to help low-income, mostly African American entrepreneurs build or expand their businesses. Of the 180 graduates of the program, 172 are still actively pursuing their businesses as of last year.
The Hillman Accelerator, created by Matthews Brackeen with former Cincinnati Bengals linebacker Dhani Jones in 2017, invests $100,000 and provides mentorship to female- and minority-owned Midwest startups. And in late June, Matthews Brackeen launched a $50 million fund to invest in companies led by racial, queer and disabled minorities, the first to do so in the Midwest, and the largest fund launch to date by a Black woman. “It further feeds our pipeline of color,” Redus says.