Minority Entrepreneurs Receive More Than $1 Billion From Inner City Capital Program

More than 180 urban entrepreneurs were ready to pitch their business at Inner City Capital Connections’ annual conference co-sponsored by Bank of America in New York City. But only four made the cut and were given the chance to sell their business concepts before a live audience and panel of capital providers “Shark Tank” style.

The crowd favorite was HDM Systems, a power solutions firms that designs and manufactures battery-based mobile and renewable energy applications.  The company was founded by Aileen Liu, who had a background in automotive chemistry; she saw that HDM was poised for growth by expanding her products beyond major trucking companies and the automotive industry into the military sector.  HDM was seeking a little over $2 million to further its expansion into new markets.

While the panel of investors made a fictitious offer during the exercise, as part of the Initiative for a Competitive Inner City, ICCC does indeed connect small business owners to high-profile capital investors. In fact, HDM came to ICCC in order to find more sources for funding and after participating in the program was able to procure a loan to propel her expansion.

According to ICCC’s 2014 Impact Report, the group helped over 677 participating companies across 39 states and 189 cities. Around 74% of the businesses are minority owned and 50% have been in business 11 or more years. More than one-third, 39%, are in business services, construction, and consumers goods and services, with revenues of $5 million or more for 23% of the businesses.

After participating in ICCC, entrepreneurs raised $1.2 billion in capital: $371 million in equity from investors and $853 million in debt–bank loans.

The key to capital raising is knowing how to pitch your business to the people. Participants learned this through hands-on coaching. Tameka Moss, a partner at Next Street and head of learning and development practice, also lead session that provided feedback to four companies that pitched their businesses. Five lessons learned:

  1. Taylor your pitch. Pitching to investors is not the same as selling consumers on your business.
  2. Keep it concise and simple. Think about how much you can convey that someone will retain in a short period of time.
  3. Sell a dream. Investors like to hear from the company’s founders and those who are passionate about their business ideas.
  4. Define your scalability model. Investors like to see that you are capable of growing the business to next level, including expansion into different locations.
  5. What’s the ROI? Investors want to hear about return on investment. Selling the company is not an easy way out.

The bottom lines is that an investor gives you $1 her or she wants to know how soon can you turn that $1 into $100 and how much of that $100 are they going to get back.