Serving Entrepreneurs in Distressed Communities

Design Thinking is a methodology that has gained popularity as a solution-based approach to solving problems that are ill-defined, have limited data available, and involve human interactions. I have covered considerable material related to design thinking in previous blogs.

A certificate program at Wake Forest University taught this material to students seeking to address social and corporate issues. Final projects ranged from redesigning the paint department at an international chain of home improvement stores, revising the call center at a large energy utility, developing new approaches for corporate training at a bank, and devising a more user-friendly approach for dog adoptions.

The subject of this blog is a project related to upward mobility. The team of participants asked: how might we devise a way to identify entrepreneurs in neighborhoods of interest or who impact neighborhoods of interest? The neighborhoods were those most distressed in Charlotte including zip codes 28205, 28206, 28208, 28212, 28213, and 28217. Team members included Seth Ervin, Patricia Shafer, Greg Jackson, Amanda Adams-Thompson, Manuel Campbell, and Thomas Connors. Emma Rose and Blair Thompson served as project leads.

The team’s main client, SP3 Capital, LLC sough to address the challenge of upward mobility in the southeast, especially Charlotte, North Carolina, Raleigh, North Carolina, and Atlanta, Georgia, with a priority to impact the most economically-challenged zip codes. Upward mobility refers to intergenerational movement from low income to higher income and all the related benefits a group of people gain from this movement.

SP3 Capital, LLC addresses upward mobility by investing capital in, and providing business acumen for high-potential businesses and entrepreneurs in these regions, and by helping them obtain access to regional networks. SP3 Capital, LLC provides capital to seed, early-stage, and growth stage companies utilizing either debt or equity instruments that impact companies in targeted regions.

Its theory of change can be shown as follows: 

(Input) Investment capital → (Activity) Identify, invest in, and provide business acumen to high-potential businesses that support target neighborhoods → (Output) Number of people impacted (measured by increases in jobs, income, and through the Kauffman Index) → (Outcome) Areas related to upward mobility improve around Charlotte using USA rankings (measured by the Distress Index; Thiel Index; Gini Index and others) →  (Impact) The rate of upward mobility is highest in the USA.

SP3 Capital, LLC also adheres to a principle of targeted universalism. This is the identification of a challenge particular to marginalized people, proposing a solution, and then broadening its scope to cover as many people as possible. The company attacks a challenge in the most difficult circumstances, creating an innovation, and then applying it to other situations. This reverse innovation is popular in many international settings.

The project team wanted to serve the client using design methods including developing personas, interviewing neighborhood entrepreneurs at various stages of their business development, prototyping solutions to gain feedback from various stakeholders, creating journey maps, and researching entrepreneurial success.

The picture accompanying this blog tells it all. The team developed a fantastic scheme by which entrepreneurs could escalate their success in three phases. Tier 3 consisted mostly start-ups; Tier 2 consisted of surviving and growing businesses; and Tier 1 consisted of succeeding and thriving businesses. As you can imagine, each tier had different requirements and different needs. For example, Tier 3 entrepreneurs need assistance on business planning and learning about their businesses. Small amounts of money, sometimes called microfinance, could help tremendously in kick-starting these businesses.

The team also identified sourcing strategies to identify entrepreneurs at every tier. Their methods included:

  • Data on African-American businesses through registered deeds and various databases;
  • Black Chamber of Commerce, community liaisons, the Urban League, and other trusted sources;
  • Traditional funders such as banks and the Small Business Administration;
  • Marketing through social media and word-of-mouth.

The project clients were Walt Frey, Executive Director of Innovate Charlotte; David Pearson, Partner in SP3 Capital, LLC; and Nat Clarkson, Partner and Managing Director, SP3 Capital, LLC. Innovate Charlotte joined SP3 Capital, LLC as a partner in the effort to increase entrepreneurial activity in the greater Charlotte area.

Thank you to the team and clients – we now have an excellent and unique road map to approach the difficult challenge of increasing entrepreneurship to impact upward mobility.

Future blogs will keep you up-to-date on this important effort.


Full disclosure, Dan Fogel is Chairman and Partner in SP3 Capital, LLC.


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