Markets and Opportunities
Companies, customers and opportunities in the urban marketplace
ICIC helps capital find inner city companies, and vice versa
An inner city location provides competitive advantages as well as challenges. The combination makes inner cities an intensely Darwinian spawning ground for some of the world’s fastest-growing companies.
Access to growth capital is one of the challenges for urban firms, and it remains a barrier for inner city business development in general. In fact, inner city businesses obtain about 20 to 50% the amount of equity and debt financing received by their industry peers. This is not surprising given that the number of commercial banking locations have diminished by 8% in the inner city in the last ten years, while increasing by 27% across the U.S.
In the meantime, the average successful inner city firm has learned how to run a lean operation. As a class, these companies have higher productivity rates and lower debt than the average U.S. corporation.
ICIC identifies investment-grade companies in the inner city, introduces them to investors and helps prepare them to compete for capital as effectively as they compete for business.
As a group, the companies that ICIC has “discovered” for investors have posted average revenue growth rates over 20% and have increased employment by over 24% since their participation in our programs.
VIEW A CASE HISTORY
Bank of America
Capital Access Funds
Bank of America has a strong institutional commitment to urban economic development and the Bank’s Capital Access Funds group is in the business of finding opportunities for investors and partner firms.
Finding investment-grade inner city firms takes digging, and most have little training in articulating their story for investors and preparing the kind of documentation that investors expect. Bank of America Capital Access decided that an outside specialist could facilitate the process.
ICIC identifies 100 fast-growing inner city companies and prepares them to meet with investors and compete for capital. ICIC organizes these Inner City Capital Connections events, and Bank of America shares the opportunity with internal and external customers. Events have been held in New York, Los Angeles and Detroit.
Results for Bank of America:
Sharing the opportunity helps the Bank's Capital Access unit enhance relationships as well as its own deal flow.
Results for Inner City Companies:
Inner companies have raised $406 million in capital from these events. Nearly 30% attract equity financing and over half receive debt capital. The others profit from the training, with over 90% going on to close on financing within two years.
Case History Quotes:
“It’s easy to say inner city businesses need capital. But pragmatically, you have to organize a group of businesses, train them and get them ready to meet with capital providers.”
"We invite the public pension funds that we’re managing money for, and we bring some of our commercial lenders so they can see the opportunity.”
- Ed Powers, Bank of America Capital Access Funds
Participants in ICIC’s Inner City Capital Connections program have average annual revenue growth over 20% and create 24% more jobs every year.
Loans to inner city companies under the Community Redevelopment Act are as profitable as non-CRA loans and have a lower default rate.
Inner city companies are more conservatively capitalized than the average U.S. corporation and generate more revenue per employee.
Middle market Inner City 100 businesses, with sales between $5 million and $100 million, are more profitable than U.S. companies as a whole.
Among growing inner city businesses, national and global sales now account for over a third of revenues.
Economic Investment Opportunities in Southeast Louisiana
In this study, ICIC analyzes the cluster development priorities of Southeast Louisiana post-Katrina and assesses how well the activities of the region’s local capital markets are aligned with the region’s economic development goals. The study provides recommendations on the role that Seedco Financial-Louisiana, a CDFI, can play in bridging the gaps that may hinder the region’s growth and cluster development.