What are the most impactful ways to ensure scalable, equitable opportunities for wealth creation in communities of all sizes? A critical segment of Siegel Family Endowment’s workforce grantmaking aims to develop inclusive entrepreneurial innovation ecosystems that are open to and centered on historically excluded populations. One of our key grantees in this space is ICA, a California-based organization that accelerates and invests in high-growth small businesses in order to create accessible good jobs that lead to equitable communities for all.
In the Q&A below, Allison Kelly, CEO of ICA, shares insights on how ICA’s work is designed to advance equity, increase and expand opportunity, and ensure that the innovation economy is built to be as inclusive and impactful as possible.
What roles do mentoring and investing play in ICA’s work to close racial and wealth gaps?
People of color, especially women of color, start businesses at higher rates than their white male counterparts but continually face structural inequities. People of color are often turned down for financing and investment capital because they have insufficient assets and are perceived as riskier investments – a legacy of structural inequities resulting in a well-documented racial wealth gap. Similarly, people of color often lack access to quality advising because they lack access to key networks and don’t have the opportunity to build the social capital to access these connections. As a result, these groups often don’t even try to access the tools and resources our society has in place to help support small business growth.
ICA supports the Bay Area’s under-estimated entrepreneurs of color by providing tailored capital, responsive coaching, and actionable connections through our three accelerator programs and investment fund, the Growth Fund. Together, our suite of programs accelerate the growth of these businesses, facilitating the increase in overall company value and, as a result, support a more equitable distribution of wealth for the entrepreneurs and their employees.
ICA’s network of pro-bono advisors engages with businesses at every stage. We have a list of 80+ dedicated advisors that volunteer their expert services to our entrepreneurs; for the length of each program and beyond. They meet one on one, serve as mentors, and teach cohort sessions on specific topics. Additionally, our program and investment teams serve as advisors to each company we work with and actively work to right-size the unequal power dynamic that’s currently present in most capital transactions.
How do you create access to opportunity, foster persistence, and enable pathways to upward mobility within a persistently changing economy?
First, let’s be clear that entrepreneurs are some of the most dynamic, determined, and tenacious people in our communities. They already are persistent. We just aim to try to help support entrepreneurs who have the playing field stacked against them.
Our current economy is not a sustainable one. I believe that ICA is helping to lead the movement to build a more inclusive economy; we work to fill the gaps we see in the small business ecosystem. To achieve our vision of an economy that works for all, ICA is reimagining ways to underwrite risk in small business lending. We draw a distinction between perceived risk and real risk – we can assess risk through business cash flow and enterprise value, not credit scores and collateral which are indicators of financial security that entrepreneurs of color have historically been excluded from. This approach is distinct from the one banks and other capital providers are able to take in today’s world.
We know that creating a sustainable business takes time. That’s why we give our companies the time and space to create value, and why our bottom line is not driven by maximizing profit but by a holistic approach to investing in great companies. We believe in giving entrepreneurs sufficient time to create long-term value and wealth for their employees and their communities.
What are the characteristics of an “inclusive economy”? How would you define an “inclusive economy”?
ICA defines an “inclusive economy” as one that works for all; it’s our organization’s vision! An economy that works for all is one that understands and acknowledges the racial and gender inequities that our system is built on and actively works to rectify them. An inclusive economy is transparent, equitable, and anti-racist.
How can tech and innovation-driven growth be strategically deployed to ensure that gains and advancements are experienced more equitably across marginalized communities and economic sectors?
Data-driven approaches to understanding the inherent biases and discrimination in our financial system help us establish where we need to begin to make changes. ICA’s Growth Fund offers three unique investment products that were created with the challenges faced by our entrepreneurs in mind. Our Seed Equity product, for example, is one of the first of its kind – a micro-equity investment ranging from $25,000 to $50,000 that specifically aims to fill the “Friends and Family” gap in financing faced disproportionately by entrepreneurs of color. We look at our investments as having a multiplier effect; our capital can be structured as a debt-free asset on an entrepreneur’s balance sheet, which enables them to access additional capital from other sources.
How do you scale effective strategies and support for high-potential leaders within your organization?
The ICA team is known for our hustle; we’re a small but mighty team of people dedicated to closing the racial and gender wealth gaps. We invest in our team, by sponsoring training, coaching, mentorship and education.
In the last couple of years, we have also made significant investments to hire additional team members to help continue our work and establish a more distributed leadership model. We are always working to ensure that we have the structure, resources, and capacity to support our ambitious goals.
What do you believe has been critical to your success and impact in this space?
There are three major categories of factors that have contributed to our success:
Informed Funders – A funder who has their ear to the ground, is interested in funding new ideas, and who see themselves as thought partners, are an invaluable asset to our work.
Partnerships – ICA plays a key role in the Bay Area’s and national entrepreneurial ecosystem. We partner – formally and informally – with a range of local and national small business support organizations to strengthen and fill the gaps in the Bay Area’s ecosystem of support and promote programming and investment practices that center racial and gender equity. The best way to close the racial and gender wealth gaps is with a full-scale, collaborative approach, from coast to coast.
Taking “risks” – Having the resources, expertise, and commitment to continue to invest in communities that have been historically left out of our financial system, and to share our learnings with our broader community, will continue to be our guiding principles towards a successful outcome for us all. Our financial system was not set up to be inclusive and has therefore deemed opportunities outside of the traditional credit boxes as “risky.” We see them as an opportunity and are excited and proud to make these investments.