Amidst a building boom happening across the city, the Grow Philadelphia Fund is hoping to give minority-owned contractors a leg up.
By Hadassah Patterson
At a time when affordable housing and job markets are at a crisis point, one organization in Philadelphia is tackling the challenge head-on—and centering women developers of color in the process.
A $900,000 specialty fund from The Enterprise Center, a nonprofit that supports small and mid-sized businesses in low-income communities throughout the Philadelphia region, is hoping to build capacity for Black and Latina construction contractors in the city by providing capital at a below-market interest rate of 1%. Called the Grow Philadelphia Fund, the initiative is a partnership between The Enterprise Center, Brandwyine Realty Trust and local public officials.
Ian Lawrence is the senior capital director at The Enterprise Center Capital Corporate, the organization’s CDFI wing. He spoke with us about how the Grow Philadelphia Fund builds wealth in Black and Latina communities through long-lasting relationships.
Why is the Grow Philadelphia Fund focused on the construction space?
That's a fairly significant part of the economy in the greater Philadelphia area. There's a significant amount of construction happening not only in Center City, but also in West Philadelphia where we are and elsewhere, like the Navy Yard multibuild project. So the market is pretty focused on construction.
The other part of the Philadelphia fund is to build capacity so that the contractors can get on larger jobs. One of our long-time clients in development has been in the trenches working through their business and recently got a $10 million investment. So that's where we want our clients to go, getting that initial infusion of capital that allows them to build capacity and gain additional capital.
So you want to get people started and help them create a foothold in the market?
Right. With the Build Back Better Act, there's going to be a significant amount of construction work that occurs. We want to make sure our clients get an equitable portion of that work.
What do you look for in your partner contractors?
We are looking for complete buy-in. We are committed to really building a strong network of minority contractors to not only go out on their own, but also collaborate. That's a commitment across not only one or two years, but several years.
You also have the Innovate Capital Fund. How does that work in conjunction with the Grow Philadelphia Fund?
The Innovate Capital Fund is a $50 million equity fund that targets businesses in the growth stage, doing over a million dollars, and need capital to accelerate the growth.
So from startup to growth space companies, we want to provide initial equity and growth equity. We want to be an end-to-end capital provider, meaning we want to provide initial capital (Grow Philadelphia Fund) and any follow-on debt in the growth of the company and then in the growth stage provide growth equity (Innovate Capital Fund).
So you are creating long-term relationships?
Exactly. We want to not only provide capital, but connect clients with opportunities and provide capacity-building through our advisory services work. So we have a group of consultants that have expertise in various areas that we have our clients interface with everything from financing to marketing and operations efficiency.
So for example, I will help a client think through the business plan and any type of projection they may be trying to complete. We are going to provide advice as it relates to how the business can be more efficient and win more contracts, because sometimes the issue is that their pricing is wrong.
This sounds similar to helping a restaurant price dishes.
Right. I used to do this when I was in DC. As you probably know, DC is a big restaurant place. Clients would come and they would say I'm going to make X amount per year and I would say let's look at it on a per-plate basis. How many plates of this cost do you need to sell to make this projection?
So having clients think through these things helps them because they may know how to cook, but they don't know the economics of cooking. So we help people think through these aspects because this is where businesses win and lose—in the pricing. They have to be competitive as well as deliver a great service.
It’s really about giving minority contractors an opportunity not only to get capital, but also to really showcase their expertise to our partners.
This interview was edited for length and clarity. It’s part of our series, CDFI Futures, which explores the community development finance industry through the lenses of equity, public policy and inclusive community development. The series is developed in partnership with Next City.