New Revivalists is a series from ImpactAlpha and Village Capital profiling the people, places and policies reviving entrepreneurship — and the American Dream.
New Revivalist: Melissa Bradley, managing director at Project 500
Place: Washington DC
Mission: Melissa Bradley and Project 500 are creating pathways to business ownership for Washington D.C. founders of color
Melissa Bradley wants to make entrepreneurship work for people of color in Washington D.C. the way it does for a white kid from Stanford. Bradley’s Project 500 is recruiting, training and connecting 500 black and Latino founders from the east side of the river in Washington D.C., an area where poverty rates track at least three times higher than the rest of D.C.
Making entrepreneurship more accessible to people of color is more than an ethical imperative. “It’s an economic one,” Bradley told ImpactAlpha. Minorities will soon become the majority in the U.S., yet often lack access to the training, capital and markets necessary to build successful companies, she says. The exclusion of the majority of its population from entrepreneurship “needs to be quickly reversed, she says.
Project 500 has worked with 480 entrepreneurs, more than half of whom live in high-poverty areas. Increases in profitability average at least 60% cohort after cohort, she reports.
Bradley worked in the Obama Administration, but says political power alone won’t help America reach post-racial equality. “We’re not going to vote our way out of this one,” she says. Communities of color, says Bradley, need to realize their economic power too.
“We have arrived at the point of participation,” says Bradley. “Moving forward will be our chance for ownership.”
ImpactAlpha: Tell me about Washington D.C.’s startup ecosystem and why it’s not working for founders of color.
Melissa Bradley: What I’ve found in D.C. is a significant focus on startups in general, mostly driven by universities. We’ve had our fair share of the large incubators like 1776, but by virtue of their leadership and oftentimes their business model, they have not done a good job of being very diverse.
I say that because there are inherent systemic racism challenges and there are challenges with people and processes. In D.C., we joke and say there’s east of the (Anacostia) river and everywhere else. East of the river you’ll will find what have typically been termed resident-owned businesses, I think there’s one financial institution there. There are no CDFIs. There are lots of churches and there’s really been a policy focus on nonprofit social services.
We realized that there was a gap east of the river. These were people who were already running businesses. For some of them going to a startup weekend or a startup program, was not of interest to them. They were either doing side hustle from their house or running business in their home. They were running businesses out in the community. That created an opportunity for Project 500.
ImpactAlpha: Are these the mom and pop businesses?
Bradley: I would not say they’re mom-and-pop. Our goal was to get 500 businesses and we’re pretty darn close. We broke them up into categories. We found that by the nature of what’s happening in D.C., we have a huge set of businesses in construction because of all the development. We have a very fast growing tech community, some of it being driven by universities, some of it being driven by what used to be a cheap place to live. And then we have tons of professional services and that aligns with the fact that we’re a government town, both federal and local.
We have divided our programs. One is for companies with about $250,000 or less; the average there is around a $100,000. These are people that have been in business one to three years. That’s not bad. That’s probably more than what they would be making if they had a job. That’s a pretty sizable amount. I would not say they’re mom and pop. They are fast-growing businesses but not comparable to tech companies. They don’t have that same level of income acceleration.
ImpactAlpha: What are the challenges entrepreneurs in these communities are facing and how is Project 500 responding?
Bradley: We know that 55% of our folks live or work in high-poverty areas. We know that 34% have a college degree. They’re educated but they need the technical training around business operations and finance. With training, we give them the language, work on their business plan, work on their pitch work on their financials, subsidize a lawyer, a tax person, a tech person, a branding person — so that they actually have the language and the package to be able to talk to investors.
The second thing is they need access to money. When you think about high-poverty areas, you don’t have a lot of banks. You don’t have a lot of angel investors.
And they need access to markets. We’ve actually found the markets piece a little bit easier than expected, as the community of D.C. changes and there’s a push for larger companies coming. There’s a push for supplier diversity and professional services.
ImpactAlpha: What are the specific issues with access to capital?
Bradley: It’s a combination of literal access to the physical institutions, when there’s one bank east of the river and it’s actually an ATM. And two, VC is not prevalent. So even that language is not popular around here. If you say equity, people say what does that mean? I think entrepreneurs of color are generally much more skeptical around equity because the whole point is about ownership. I think most of them have done debt, credit card debt, leveraging their homes.
Then there’s the structural racism in financial institutions that exists, that Timothy Bates and others have validated through Kauffman research, etc.: They’re 33 more likely to be declined for a loan just by race. That’s the historical legacy around access to capital.
ImpactAlpha: I love how you frame entrepreneurs of color as the “new majority entrepreneurs.” What is the business case for investing in new majority entrepreneurs?
The biggest one is, our own success as a country is contingent upon economic development and growth driven by entrepreneurs. The reality is the entrepreneur numbers have been declining. The fastest growing percentages are African American females and Latinos, who are typically ignored by venture capital and certainly less likely to be admitted into accelerators. It’s a moral imperative, but it’s more economic.
If you think about where the fast-growing population is, who have been historically been excluded from access to entrepreneurship, and that is the primary driver for economic opportunity in America? We’ve made a historical mistake that needs to be quickly reversed.
Those that are going be the majority — and they are going to be the majority — must be able to actually contribute to the economy as opposed to being subsidized and marginalized, which we have been for 100-plus years.
ImpactAlpha: How have Project 500 entrepreneurs performed?
Bradley: We have run three emerging cohorts and now we’re running our second high-growth cohort. We track increased profitability, increased staff, and increased investment. Cohort after cohort, we have averaged anywhere between between 60% to 65% increase in profitability just by going through the program. You think about for our million-dollar-plus companies, that’s pretty good growth, whether you’re looking at equity or debt.
ImpactAlpha: How did you end up taking an entrepreneurship approach to community development?
Bradley: It started by my own desire to be an entrepreneur. I went to Georgetown undergrad as a finance major. Got a corporate job. It sucked. But entrepreneurship was not a household name. My mom cleaned houses on the weekends, she did accounting during the week. I didn’t know many entrepreneurs.
Luckily, having been at Georgetown, I kept hearing people talk about, ‘Oh, my dad’s an entrepreneur.’ I was like ‘What the hell is that?’ I realized, well, I can’t do any worse than I am now in corporate America. I went to the Small Business Association and they told me that I had three strikes against me. I was black. I was a woman. And I was going into financial services. If the government’s telling me I’m not worthy, I’m like ‘What the hell?.’ By the grace of God I went on to start the company, we got acquired and I was like, never again. And that was the beginning for me. Never again.
I’ve done what I’m trying to help other people do. So many programs out there and most of them don’t work. Part of this for me was bringing rigor. We did a competitive analysis. There’s testing. There’s ongoing evaluation. We want to make sure this shit is working. Otherwise it’s just yet another program.
ImpactAlpha: You place an emphasis on building wealth versus job skills or employability. Tell me about that.
Bradley: We live in a capitalist society. I don’t want to create a situation where we are permanently lending ourselves to creating an underclass. Why should I diminish the promise of entrepreneurship, which is, you have autonomy, you have freedom. It can also build wealth. And wealth is relative. Wealth is being able to take care of yourself. I don’t shy away from that.
We do recognize that for people who have been incarcerated, for people who have other challenges, people who are just black and male, getting a job in corporate America is not the answer. So why not entrepreneurship? It should indeed be as much of an economic driver for people of color as it is for a white kid from Stanford.
ImpactAlpha: Are we at a defining moment here for black entrepreneurship?
Bradley: I’m going to own my bias, since I worked in the Obama administration. The reality check for me is that we have not achieved post-racial equality, even though we had a black president. There’s a sharp distinction between political power and economic power.
Then now to have what we have, coupled with a declining economy evidenced by decreased entrepreneurship and a focus on the non-coasts, Steve Case being one signal of that. I like to think us and all of the entrepreneurs you’ve profiled (in the New Revivalists series), Carmen and Mortar, as another signaling effect, of the rest.
There is both a fear and inquisitiveness about what it means to have a new majority. Black culture is pervasive but people still don’t love black people, which is fascinating to me.
It’s a moment where we have idealized and fantasized about everything that is new majority and seeing manifestations of our political power and but not our economic power.
Now is that chance. When you think about something as simplistic as the Black Panther coming out and really demonstrating — and I mean it’s a black tech person’s dream. Not just the tech, but that there was a fundamental story about the power of excellence, existing and then actual then dying within a people that are completely marginalized and off the radar screen. But it doesn’t make it less them, it actually makes more powerful. That’s pretty compelling.
Now that we’re the new majority, we’re going to succeed. But you got to let us have the economic power too. We’re not going to vote our way out of this one.
My mom turns 90 next month. When I look back at her living in Jamaica Queens and walking miles because she wasn’t allowed to ride the bus, she couldn’t use the bathroom, to then have kids of her own, who are extremely well-schooled, and sitting in private schools…We have arrived at the point of participation. Moving forward will be our chance for ownership.
- The Code of the Extraordinary Mind, by Vishen Lakhiani
- Crushing It!, Gary Vaynerchuk
- Masters of Scale, with Reid Hoffman (Podcast)
More from the New Revivalists:
- Daryn Dodson: Tackling investors’ racial and gender biases to unlock hidden value
- Heather Fleming: Bringing global social innovation home to the Navajo Nation
- Brian Dixon: The 34-year-old African-American VC turning inclusion into a competitive advantage
- Bryce Butler: Quarterbacking capital into Louisville’s neighborhood economies
- Mark Warner: ‘Virginia is for Entrepreneurs’ shows policy leadership
- Lisa Skeete Tatum: Unlocking the value of women’s talent in the workplace
- Ben Hecht and Ellen Ward: Closing the racial wealth gap with early capital and innovative finance
- Arlan Hamilton: The VC taking cold calls from underestimated entrepreneurs
- Charlie Brock: Building a startup ecosystem for Tennessee’s entrepreneurs
- Carmen Rojas: Building a 21st-century economy that works for working people
- John Lettieri and Steve Glickman: Turning capital gains into community investments
- Propeller: Helping local entrepreneurs rise with New Orleans’ revival
- Brandon Dennison: Transforming coal country, one social enterprise at a time
- Jacob Haar: Financing the financiers expanding small-business lending in America
- Bryce Roberts and Tim O’Reilly: VCs that help startups raise revenues, not rounds
- Margaret Bradley: Turning Philadelphia institutions into impact investors
- Derrick Braziel: Breaking down barriers for Cincinnati’s entrepreneurs of color
- The New Revivalists: The people, places and policies reviving entrepreneurship — and the American…