With community organization support, food entrepreneurs of color fight barriers to launch and scale

When Jennifer Lyle decided four years ago to move from making her lemon butta pies out of church basements and into a small, rented kitchen in Eastern Market, she knew that she needed to buy her own equipment. The head baker and owner of Lush Yummies Pie Co. — whose award-winning lemon butta pies are made from a recipe passed down by her late grandfather — says she tried to get a loan but was unable to. So, she turned to crowdfunding.
 

Using her crowdfunding campaign, Lyle sought to raise $2,000, which would be matched under the Eastern Market Growing Communities (EMGC) Micro Grant Matching Initiative. Through EMGC, food entrepreneurs can apply for funding to assist with areas like equipment, business signage and display stands, land, and legal support. Lyle raised the money and was able to buy her first starter oven and mixer.

Lush Yummies Pie Co. owner and head baker Jennifer Lyle

But as her company started to grow, Lyle not only needed more equipment, but also branding.

“I needed a lot of help if I wanted to be able to reach my audience,” she says. At the time, her pies were selling at farmers markets and events with one or two dozen people. Lyle again turned to Eastern Market, who had grants available for branding. As a 2017 grant recipient, Lyle received a new logo, a new packaging design from Skidmore Studio, and a website.

In order to continue scaling, Lyle says she needed a much larger loan. She got approved for a character-based loan from ProsperUS, which offers small businesses training, services, and micro-lending. However, the loan, worth around $3,000-$4,000, was only a portion of the amount that Lyle needed. She was also required to pay it back within 60 days, which she did.

“Why is it so hard to get these loans?” she recalls thinking at the time. She decided not to deal with loans anymore. “I felt that I had the gift of gab and so I started applying for pitch competitions.”

Finding and securing capital is a well-documented struggle for startup food businesses owned by people of color, especially Black and Black women owners. In addition to money, food entrepreneurs of color face other challenges, namely lack of access to education in business development and management, and a lack of social and professional networks in the business community.

“A food business is good in the sense that people can start them with fairly limited capital compared to other industries,” says Dan Carmody, president of the Eastern Market Partnership. “But when people go to scale them, it takes more capital.”

Dan Carmody, president of the Eastern Market Partnership

A report released in January that was commissioned by the New Economy Initiative (NEI) looked at the landscape of available capital for underserved small business owners in Detroit, Hamtramck, and Highland Park. For entrepreneurs of color, the three key themes that stand as barriers in accessing capital include:

• A lack of a collaborative ecosystem that helps educate entrepreneurs about identifying the right type of capital they need based on the stage of business that they are currently in.
   
• The need for more mentors and coaches to help entrepreneurs build financial and small business management skills, navigate lending requirements, and build trust in systems not originally designed for them.
   
• The need to address institutional bias in the lending system.

“It’s two different problems – there are difficulties both in the preparation to get ready to borrow money and then there are problems with fewer resources available to find that capital when you are ready to borrow,” Carmody explains.

In addition to the Detroit Kitchen Connect and micro-grant programs that Eastern Market offers to new food entrepreneurs, the organization is developing a new food accelerator space, set to open in early 2020. Named the Metro Accelerator, it is intended to assist entrepreneurs with the challenge of scaling. Eight spaces – five for production and three for retail – will be leased by businesses when they outgrow a shared-use kitchen and want to maintain control over their expanded production. Lyle’s Lush Yummies Pie Co. is one of the five businesses that will utilize the space.

Closing the wealth, capital, and trust gap

The Tapestry of Black Business Ownership in America, a report released this past spring from the Association for Enterprise Opportunity (AEO), explored three challenges that impede Black business development nationwide. They included the wealth gap, the capital gap, and the trust gap.

Under the wealth gap, Black businesses are starting out with less wealth. The capital gap shows that Black businesses have a higher demand for it, but get less than what they ask for, if they get it at all. Finally, the trust gap comes from a life of discrimination, bias, and disappointments that has caused wariness of banks, institutions, and would-be mentors and consultants. For Black-owned firms that are in the food industry specifically, those interviewed said lack of support from financial lenders, finding ways to increase sales, and finding qualified employees are top challenges.

“So what kind of systems can we create on a community level so that we can provide workarounds to creating, growing (and) scaling businesses outside of the systems that we know don’t inherently care for or support us?” asks Devita Davison, executive director of FoodLab Detroit.

The report recommended addressing all three challenges simultaneously. From that, AEO launched the Tapestry Project Action Lab. The initiative, which is dedicated to amplifying the success of Black business development, is made up of cohorts in Atlanta, New York City, Raleigh, Minneapolis, and Detroit.

The local Tapestry Project Action Lab is a collaboration between FoodLab and ProsperUS. It is a 12-month fellowship providing a cohort of food entrepreneurs with business education, mentorship, wellness support, and early-stage seed capital. The cohort is made up of seven, primarily Black women-owned food businesses. Each business is working with one of the two business mentors (one from FoodLab and the other from ProsperUS) to create a customized project action plan. The cohort will also start a lending circle, and this is money that members can use to fund their projects. Each woman will contribute to the pot every month. The cohort will also decide on a rotating basis who can pull from the pot each month.

“It’s all about how are we doing community care work, and how are we doing that in a way that is supportive, in a way that is collaborative, and in a way that brings trust and care and capital altogether,” Davison says.

Lea Addington, founder of Lit Vegan Kitchen, is one of the 10 entrepreneurs in the cohort. She says one of the biggest challenges for her in starting her business was having access to information.

Lea Addington, founder of Lit Vegan Kitchen, is one of the 10 entrepreneurs in the cohort.

“I think that (unless you’re) going through a university type of setting, there’s not a lot of exposure to entrepreneurship if you don’t have it in your family,” she says. “I don’t have a lot of entrepreneurs in my family, so with FoodLab and the Tapestry project, that’s what’s being offered to me is that information.”

For Addington, another valuable part of the Tapestry Project Action Lab is that she now has business mentors — Ederique Goudia from FoodLab and Chris Butterfield, which she says she’s never had before but has always wanted. Without an initiative like Tapestry, “where do I go to find a business mentor if I don’t have entrepreneurs in my family?” she asks. “And if I’m not wanting to go to business school, where do I go to find somebody that can help me? Especially someone who looks like me?”