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MBN USA

June 25, 2021

Insights: Ascend programs will generate $1 billion in new revenues for MBEs

Simple answers, hard actions

By Michael Verchot, director, Consulting and Business Development Center, University of Washington Michael G. Foster School of Business

Just 251,855 minority business enterprises. That’s it.

In the 52 years since the U.S. Department of Commerce Minority Business Development Agency was founded, the 49 years since National Minority Supplier Development Council Inc. started and the 20 years since the launch of Billion Dollar Roundtable Inc., just over a quarter million MBEs have revenues of $1 million or more.

During this time, entrepreneurs of color have demonstrated a level of determination and resilience that is unprecedented and underappreciated. Despite the many hurdles they have faced, small businesses owned by people of color — those with 500 or fewer employees — are the only businesses that have been collectively adding new employees for the 14-year period up to 2016. During this period, small businesses as a whole added 2.6 million employees for a 4.7% growth rate. Yet, white-owned small businesses collectively shed 1.4 million employees (2.8% decrease) while MBEs added more than 4 million employees (85% increase). Asian/Pacific Islander-owned businesses grew at the fastest rate, nearly doubling the number of people they employ. Employment at Latinx-owned companies grew 85%, and employment at Black-owned companies grew by more than 50%.

The questions before us are simple: How will we grow the next 250,000 MBEs to be $1 million-plus firms and 10,000 middle-market MBEs in less than 50 years?

The answers are simple, but the actions are hard. Since the summer of 2020, corporations including Microsoft Corp. and The Coca-Cola Co. made $500 million in new commitments to procure products and services from Black-owned and other MBEs over the next five years. They have already staffed up, identified potential new suppliers and are matching MBEs with contracting opportunities that will grow over time.

In May of this year, JPMorgan Chase & Co. made an additional $7 million investment to build the national infrastructure for the Ascend cities entrepreneurial ecosystems that in 2020 generated $85 million in new revenue for MBEs. This national investment will be coupled with an additional $15-18 million in Ascend programs in 15 cities. It will generate $1 billion in new business revenues, while growing 400 additional MBEs to have revenues of more than $1 million, 75 more to have revenues of more than $5 million and 25 more to have revenues of more than $10 million. Chase is aligning its commitment to spend an additional $750 million with MBEs in this Ascend network.

This type of alignment between corporate procurement and institutions grows necessary management skills and provides money businesses need, leading to the success to which we all aspire.

To learn more about Ascend, visit ascendcities.com. To learn more about the Consulting and Business Development Center of the University of Washington G. Foster School of Business, visit foster.uw.edu/centers/consulting-and-business-development-center.