The $100 Million Fund That’s Fostering Detroit’s Minority Startup Entrepreneurs – Forbes

The $100 Million Fund That’s Fostering Detroit’s Minority Startup Entrepreneurs – Forbes

Justine Sheu didn’t have any plans of becoming an entrepreneur. The Detroit-based millennial spent her early career educating underserved youth in the area. But with the backing of a funding initiative specifically targeted to boost women and minority entrepreneurs in Southeast Michigan, Sheu cofounded two education-technology startups. Notably, she’s the CEO of Pro:Up, a mobile app that connects high school students with extracurricular and career opportunities via text message.

Her companies have won six different startup awards, been part of multiple accelerators and granted a total $55,000 in non-diluted startup capital. The CEO now has further plans to raise seed capital to grow.

The idea for Pro:Up came from seeing how underprivileged youth were excluded from receiving necessary career and life development information. “As a college counselor in Detroit, I saw the school system had a number of gaps in providing students with resources, information and exposure,” she says. “The students we worked with were largely low-income youth of color that were severely disadvantaged by multi-generational poverty.” They were usually the last to learn about chances to progress, if at all, disadvantaged further by a system that burdens a handful of school counsellors to serve hundreds of inner-city youth.

So Sheu set out to help in an entirely different way from her counseling days – through technology. Pro:Up launched in January 2016 and already has a network of 550 students from 30 high schools in Detroit. It has also secured 10 paying customers who advertise opportunities through the site, including the University of Michigan’s School of Engineering, which connects the largely minority youth base to opportunities in STEM.

Her own entrepreneurial journey was once inconceivable, she says. As a woman of color from a Taiwanese background, Sheu says “entrepreneurship seemed a far reach for me initially.” And in fact, she believes if she was trying to start a company in other tech hubs – Silicon Valley or New York – she would likely struggle to get the capital or mentorship she’s had to date to develop her ventures.

The Rust Belt doesn’t immediately come to mind when thinking of entrepreneurship, but over the last nine years, a $100 million fund has quietly been raising the next generation of unlikely founders. It’s one that’s given entrepreneurs like Sheu a startup ecosystem to grow their ideas.

The New Economy Initiative (NEI) started as a pool from various philanthropic foundations back in 2007. But it’s differed from other entrepreneurship funds: “It wasn’t just focused on economic development, but inclusive economic development,” Pam Lewis, Director of NEI tells me. “Traditionally in the high-tech sectors, there’s not necessarily any intentionality around including women and people of color,” she says. “For us, that was the basis of it.” NEI funds a variety of startup initiatives; from accelerators and business competitions, to co-working spaces and aspiring entrepreneurs.

Indeed, nearly a third of the high-tech entrepreneurs NEI’s grants have supported are minority and women-owned. NEI’s programs – and the ones it funds – not only help raise capital for aspiring tech entrepreneurs, but provide them with mentorship and a robust startup network to tap into. This piece of the pie is critical, yet sorely lacking for minority entrepreneurs in comparable programs across the country.

So, can investing with a social lens also benefit investors? Lewis points to the data. In less than a decade, NEI’s investments have started some 1,600 companies, that have raised $600 million in capital and created 17,000 jobs regionally. She says it’s a win-win for all involved – the entrepreneurs, the community, and recreating a healthy economy in an area that has long struggled to get back on its feet.

Of the companies funded by NEI, 39% of are minority owned – nearly double of the 21% national average. Boosting minority-owned enterprises is key to her agenda of investing $1 billion into the entrepreneurial ecosystem over the next five years.

Lewis herself attended a pre-college engineering program targeted to bringing more minorities into the field, back in 80′s. “Very early on, I was exposed to internships and opportunities to get on to an engineering career path,” she says. She learned firsthand how crucial early exposure to STEM – typically reserved for white and male students even today – can be to changing the lives of minority youth. It’s what guides her commitment to building inclusive entrepreneurship from the ground up. According to her, most startup communities focus on diversity as an afterthought; trying to fix the problem belatedly instead of intentionally designing it from day one.

She suggests two ways other cities or states can replicate the NEI model. First, get philanthropy involved. “Philanthropic organizations can really push the envelope on inclusion,” she says. Most importantly, don’t write off high-growth firms that are not high-tech – it’s a mistake she sees large investment funds often making. “Don’t focus on checking the box of inclusion, but actually on building services for women and people of color that have energy, drive, great ideas,” she says. “Be that special intervention that gives them access to resources.”

Sheu, a benefactor of multiple programs funded by NEI adds: “Three millennials with zero business backgrounds were able to build and grow two companies because of the ecosystem here…the entrepreneurial energy is palpable.”

Ruchika Tulshyan is the author of The Diversity Advantage: Fixing Gender Inequality In The Workplace (Forbes, 2015). Connect with her on Twitter.


No Comments

Sorry, the comment form is closed at this time.