As the world closed down in 2020, Detroit entrepreneurs Wendy and Dom Da’Cruz saw their future open wide. A missing ingredient led to a flash of inspiration, and the Mushroom Angel Company was born. Today, the couple’s mushroom-based Cruz Burgers can be found in restaurants and grocery stores in six states, and they’re getting bigger every day.
Small businesses like this form the backbone of Michigan’s economic growth. Our state is home to more than 900,000 small businesses, which are responsible for nearly half of the state’s jobs. Our region’s future and our shared prosperity depend on our ability to nurture, grow and strengthen these companies. To achieve this, we first need to take a holistic look at Michigan’s business climate.
A 2023 report from the Michigan Venture Capital Association pointed to a lack of early-stage capital that is critical to helping the state’s startups and small businesses get off the ground. In April, Michigan lawmakers came together across party lines to tackle this challenge through the creation of the $105 million Michigan Innovation Fund, which seeks to make long-term investments in Michigan startups, create jobs and spur others to invest. As our state looks to take this step, it can learn from the success that’s been achieved in Southeast Michigan, which has made early progress building equitable prosperity and closing disparities by investing in underserved communities.
Paving the way for strong local businesses with resources to hire and retain local talent can help build commercial corridors, leading to more successful neighborhoods and a more prosperous future for everyone.
An example of this approach at work can be seen in the New Economy Initiative, an effort of the Community Foundation for Southeast Michigan. Since 2009, the initiative has worked to build a network of support for entrepreneurs and small businesses with the goal of growing new companies and jobs and encouraging investment into Southeast Michigan. By leveraging philanthropic dollars, it has invested $142.5 million to strengthen small businesses and underserved communities. The initiative has supported more than 29,699 companies, including the Mushroom Angel Company.
The initiative’s approach is in and of the neighborhoods it serves, tapping local ambassadors who connect with entrepreneurs in their areas who need help to grow their businesses. Capital is provided through grants and loans that are more accessible than traditional commercial and public-sector sources.
These are coupled with business support programs that meet companies where they are offering coaching and tools in areas like accounting, finance, marketing, technology, human resources, legal issues and daily operations. NEI helped launch the Michigan Microbusiness Coalition to build support for emerging entrepreneurs and small businesses as essential drivers of economic growth and job creation.
In a recent survey of Southeast Michigan businesses by Detroit Future City and the New Economy Initiative, more than 60% of respondents reported feeling somewhat or mostly positive about the region’s overall business climate. Yet they’re split on the direction that it is going, with just under half believing the environment has improved over the past two years. When it comes to their own companies, however, entrepreneurs show overwhelming confidence. Four out of five feel somewhat or mostly positive about their financial futures. When asked what was standing in their way, more than half cited a lack of access to capital.
Southeast Michigan businesses that engaged with the business support ecosystem had a better idea of where to find resources than those who didn’t. Businesses that had a higher level of engagement with the support ecosystem were more likely to have financial statements on hand than those who didn’t.
Driving investment in small Southeast Michigan businesses, particularly in communities where residents have been historically underserved, has the potential to make a transformative impact. A report by JP Morgan Chase and ICIC studied Detroit and four other major U.S. cities and found that helping existing small businesses hire a few additional employees apiece could wipe out unemployment in each city’s most underserved areas.
Inclusive investments in underserved small businesses can change the trajectory for struggling neighborhoods, build wealth among entrepreneurs of color and women, and improve the overall economy. Those businesses create accessible and good paying jobs for local residents. They offer needed products and for nearby residents, building wealth that stays in and benefits the immediate community.
As Michigan takes steps to spur greater investment in our communities, it’s important to remember that we can all play a role in making that happen. Public, private and philanthropic funders can adopt economic development strategies that bring capital, services and support to small businesses in communities that have been historically marginalized. As individuals, we can make sure to support the businesses in our own communities.
The next Ford Motor Co. is located in this region, and if they are provided with the proper support, they will be able to thrive in this economy. Investing in entrepreneurs like Wendy and Dom Da’Cruz and strengthening companies in underserved communities leads to shared prosperity that benefits us all.
Wafa Dinaro is executive director for the New Economy Initiative (NEI), a project of the Community Foundation for Southeast Michigan.