Why it matters:
- Between 2017 and 2021, companies with a Black founder had access to less than 1.3% of total venture capital dollars for each of those years.
- Lack of capital is the main obstacle preventing diverse businesses from achieving the scale needed to grow.
- Against that backdrop, Macy’s has committed $30 million to a partnership with Momentus Capital that aims to make up to $200 million in loans and equity investment available to underserved growth-stage businesses, and the opportunity to be a supplier to national retailers.
A year ago, Macy’s unveiled a new social purpose initiative called Mission Every One, in which the retailer promised to invest in changes that would better meet the needs of people, communities, and the planet.
Now, Macy’s is ramping up to begin delivering on one piece of that promise, with a program designed to help diverse and underrepresented businesses get easier access to funding and to mentoring and education that will help them take their businesses to the next level.
The program, called S.P.U.R. Pathways, is seeking applications from growth-stage businesses looking to become big enough to supply national retailers the size of Macy’s. S.P.U.R. stands for Shared Purposes, Unlimited Reach.
“At Macy’s we often meet terrific, underrepresented business owners with great ideas for services or products,” Matt Bergantino, Vice President of Procurement at Macy’s, told CO—. For more than a decade Macy’s has been offering a workshop to offer education and access to diverse suppliers. But increasingly, Bergantino said, it became obvious that a key problem for small, minority-owned businesses was access to financing.
“The largest challenge for many of the partners we work with today, and who we want to work with in the future, is their lack of scale, which is hindered by the lack of substantial capital deployment,” he said.
Venture funding database Crunchbase reported last year that between 2017 and 2021, companies with a Black founder received only per year 0.8% to 1.3% of total U.S. funding.
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‘How do we really break the systemic barriers that are faced by diverse-owned or underrepresented businesses?’
S.P.U.R. Pathways, Begantino said, is a multiyear, multifaceted effort, with a big goal: “How do we advance entrepreneurial growth, how do we close the wealth gaps, and really break the systematic barriers that are faced by diverse-owned or underrepresented businesses?”
The answer Macy’s came up with was a partnership with a nonprofit community development financial institution (CDFI) fund, Momentus Capital, to help get those businesses access to funding.
Over the next five years, Macy’s will invest $30 million in the program, including a $20 million investment in its own supplier access fund, and an additional $10 million investment with Momentus. The partnership with Momentus is expected to provide up to $200 million in funding, through a range of options. The funding will be in the form of loans or equity investments, not grants.
Funding amounts could range from $20,000 SBA loans to $5 million equity investments or $30 million commercial real estate loans.
“At Macy’s we often meet terrific, underrepresented business owners with great ideas for services or products,” Matt Bergantino, Vice President of Procurement at Macy’s, told CO—. But increasingly, Bergantino said, it became obvious that a key problem for small, minority-owned businesses was access to financing.
Matt Bergantino, Vice President of Procurement, Macy’s
Macy’s is offering minority-owned businesses, as well as companies with female, veteran, and LGBTQ+ owners, a chance to apply for the S.P.U.R. program through a link on its website.
The program is looking to help grow businesses that support the retail industry, either as creators of goods to be sold at Macy’s or other stores, or as providers of services, such as tech or transportation or logistics, that retailers need.
Macy’s is seeking companies that are past the startup phase and want to scale to be able to fill orders for Macy’s or other large retailers.
Candidates for S.P.U.R. can be as small as companies with a few hundred thousand dollars in revenue that are looking to secure SBA loans, Bergantino said. For larger equity investments, he said, “we’re generally looking for [companies with] a couple million dollars in revenue, and [that are] cash-flow positive.”
‘Financial capital is important, but there’s the social capital in making sure they’ve got the right kind of business network’
While Macy’s will provide its existing education and mentorship services for S.P.U.R. participants, Momentus will be adding to that with financial literacy education. “That includes everything from advice on credit improvement, business plans, financial reporting, operating challenges, [and] business strategy,” Bergantino said.
“We really are using this program to look at, holistically, how we [can] help companies be successful,” he said.
“Financial capital is important, but there’s the social capital in making sure they’ve got the right kind of business network,” he said.
Momentus also will able to guide businesses through the SBA loan application process, and make sure they have the financial readiness for that.
Bergantino said the response to the program thus far has been enthusiastic. “We’ve had hundreds of applications so far and we’re starting to vet through them,” he said.
“When you have the financing partner, the retailer, and the supplier all working in tandem, it just opens up a whole new level of opportunity,” he said.
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