A recent panel discussion co-hosted by the Kauffman Foundation and The Kansas City Business Journal, and moderated by Michael Carmona, senior director of KCSourceLink, offered a glimpse into how the critical role equitable access to opportunity, knowledge, support, and capital plays out – for better or worse – on the ground in Kansas City, Missouri.
Two entrepreneurs shared their startup experiences, adding the perspective of being women, specifically as a first-generation Asian American woman and a Black woman and mother. Local entrepreneurial ecosystem builders joined them to discuss promising new approaches to increasing access to capital, and the intentional focus from city officials to provide the support and technical assistance entrepreneurs need to start and grow businesses.
Jackie Nguyen is the owner of Cafe Cà Phê, Kansas City’s first and only Vietnamese coffee shop. It opened in the midst of the pandemic – first as a mobile cart, then as a truck, and, now, it is settling into a brick-and-mortar location in the Columbus Park neighborhood. Nguyen shared stories on how traditional sources of lending were unavailable to her, her caution about taking on debt, and her decision to crowdsource the funding she needed to start and grow her business.
“I am a first-generation Vietnamese American raised by a single mom,” Nguyen said. “I’m also an actor with no assets and terrible credit. Crowdsourcing the start of my business was not only my only option, it also allowed me to start my business debt free, which I felt was important in helping me break the cycle of poverty in my family.”
Nguyen raised about $13,000 doing a Kickstarter and selling coffee, even stickers and cups from her mobile cart. “But then in order to raise money for my brick and mortar, I tried again. And, even after I had sold coffee, I was still denied access to capital. And it was due to my credit, it was due to the fact that I still had no assets, really. I did not have a car; I didn’t really have anything. I felt really stuck,” she said.
America’s New Business Plan (ANBP) for 2022, Kauffman’s nonpartisan plan offers ideas for creating a more inclusive economy by building a prepared workforce and concentrating on entrepreneur-focused economic development. It is a policy roadmap to shine a spotlight on what entrepreneurs need: equitable access to opportunity, funding, knowledge, and support to start and grow businesses. Check out ANBP >
Nguyen said she entered every grant contest and pitch contest she could. She did GoFundMe campaigns in collaboration with other small businesses and told her story wherever she could. She even went door-to-door, handing out flyers in neighborhoods, and introducing herself and Cafe Cà Phê. “That’s a hustle that you have to do every single day nonstop,” she said. “I ended up bootstrapping the entire thing. I raised about $95,000 on my own, mainly.”
Carmona reiterated that for underserved entrepreneurs, it is much tougher to get loans and other financing. The systemic disparity is unmistakable for households with lower household income and less generational wealth.
Ruben Alonso is CEO of AltCap, a mission-driven lender based in Kansas City. AltCap, a Kauffman Foundation grantee, is a community development financial institution, or “CDFI.” Alonso explained that CDFIs exist, essentially, to bring capital to entrepreneurs who fall out of the financial mainstream.
“And that’s really our mission, our purpose in Kansas City and beyond now,” he said. “We’ve grown beyond just the Kansas City Metro, but what we do is really find gaps in the capital markets that we can fill in terms of getting a loan to an entrepreneur to start a business, or grow their business, or providing kind of catalytic capital to a community that has been disinvested or underinvested.”
Funding innovation plays an important role in the future of capital. “It’s an unfortunate fact that it still matters who you are or where you live in terms of accessing kinds of traditional capital. And that’s kind of the access to capital issue that we’re trying to help a lot of entrepreneurs overcome,” Alonso said.
He noted that if you don’t have a home or a car that can be used to guarantee a loan, you’re at a tremendous disadvantage in the eyes of traditional banks. Alonso and the team at AltCap are innovating around ways to guarantee loans that depend not on traditional assets, like homes and cars, but instead on revenue-based financing that looks at future revenue potential of businesses.
“Revenue-based financing will be a game-changer for those who have challenges accessing asset-based financing,” Alonso said.
The discussion also covered the ways city policies and resources can better support entrepreneurs. Samuel Morris is the small business policies coordinator for the KC BizCare Office of the City of Kansas City, which exists to provide technical assistance to people who are going through the many regulatory requirements that are required to start a business, whether that’s federal, state, or city. He talked about the ways Kansas City staff are providing the technical assistance entrepreneurs need to have more clarity on the rules and regulatory requirements for entrepreneurs while connecting them directly with resources they need.
“We are one of only two cities that offer technical assistance to entrepreneurs and the only city that does it at the scale we do,” Morris said. One of the first things the office did when it began in 2009, was overhaul a process that historically took entrepreneurs two or three months, to take an hour or less.
Still, he said, there is a lot of work to do to reduce barriers and increase equity for entrepreneurs. “We want to make sure that the process is equitable. We want to make sure that the process, since we’re asking folks to do it, is easy. We want to make sure that the process satisfies the city requirement but is also friendly. Like it’s 2022. I don’t need to notarize something and put it in the mail,” Morris said.
“The analogy that I like to use – that all of us are very much aware of here in Kansas City, especially this time of year – is potholes in the street,” he said. “We’ve been helping people get through this process by saying, ‘Hey, go turn left on this street, but make it a wide left or else you’re going to have to get a new ball joint.’ That’s what we realize in Kansas City. But what we’d like to do, we’d like to repave this street.”
The panel’s entrepreneurs also focused on the resources – many of them free – that are available to entrepreneurs just getting started.
India Wells-Carter is the owner of Fresh Factory KC, a selfie studio and event space. She credits a host of resources that helped her get her start in entrepreneurship – KC BizCare, The Porter House KC, among others. Wells-Carter participated in FastTrac, a Kauffman Foundation program – launched in Kansas City by Ewing Kauffman himself – that equips aspiring entrepreneurs with the business skills and insights, tools, resources, and peer networks necessary to start and grow successful businesses.
“At the end of the 12-week course, I had created a business plan that gave me confidence to start my business,” Wells-Carter said.
“When you jump into entrepreneurship, it’s not just a career change, it’s a whole lifestyle change,” she said. “I went from a nine-to-five, shut down the laptop, go about my day, to working around the clock … That was a significant shift in how am I spend my time, great sacrifices with my husband, with my child as well.”
She admits it’s scary to rely solely on her husband’s income and health insurance. “I think that speaks a lot to our healthcare system and retirement systems and a lot of other systems that really don’t favor entrepreneurs,” Wells-Carter said.
“I have the support, I have the village, I have the people. If you’re walking this journey alone, it makes it 10 times more difficult,” she said – especially for women and historically marginalized groups. “If you can be a village for someone, help them out. I appreciate everybody who has helped me out along this journey. It means so much to entrepreneurs.”
Wells-Carter reflected on her and Nguyen’s experiences and conversations. “We’re knowledgeable, we’re tenacious, and there’s still things we don’t know. I’m forever grateful for the [BizCare] office because it gave me that confidence, like, I’ve done it right,” she said. “You don’t know what you don’t know. So, as much as we can share this information, get it in front of people, make it accessible, I think our entrepreneurial economy and network here in Kansas City will be that much stronger.”