Administrator Guzman, Small Business Administration
The Milken Institute Global Conference brings together market leaders from around the world. It’s a collection of current and former heads of state, leaders of industry, and the players and power structure that control global financial markets. From the stages, the overall tone was one of economic optimism. In the hallways there was more skepticism and worry voiced about wars in progress, climate risk, unpredictable election cycles, inflation challenges, and growing China/US trade tensions.
This is a place where if you wade through the thousands of people largely decked out in the banker’s blue suit uniform, you’ll soon discover a small but expanding river of people who speak the language of inclusive capitalism, equitable entrepreneurship, and expansive opportunities. The uniform for this small but growing tribe includes bright colors, bold prints, and sartorial statements like big eyeglasses and playful ties. I immediately gravitated to the directional force of this tribe based on the amazing conversations about new markets, new financial mechanisms, untapped opportunity, and the future of capitalism.
The conversations were grounded specifically in investing in more and different people and places because it’s good business, acknowledging the focus is not on charity or simply “giving back”, but on identifying and investing in growth opportunities. It’s about the market inefficiencies created by systemic discrimination and the requisite investments to dismantle and build new systems. It’s about unlocking value and wealth. This is the language and work of Next Street and why we were invited as part of our work on the Initiative for Inclusive Entrepreneurship (IIE) to attend this year’s event. We are grateful to our partners at the Milken Institute for the invitation to participate.
In addition to the big names and big themes, I wanted to share some specific takeaways of note to Next Street:
1. Small Business is big business and investing in diverse business is smart business
Small business development and expansion is critical to solving the challenges we’re facing today. And it was reassuring to hear from many attendees and panel discussions how small businesses are interwoven into their plans and priorities from helping to drive inclusive capitalism to investing in the green economy. To build the infrastructure we need, solve our climate challenges, and create jobs and economic mobility pathways, we need to invest in entrepreneurs and small businesses, particularly those led by people of color and women. This is where the growth is.
A record-breaking 5.5 million new business applications were filed in 2023 alone, but only 22% of businesses are owned by women, and 3% by Black Americans. And those businesses face challenges, with less than 1% of available VC-funding going to Black founders, and 1.9% going to women founders.
2. Climate investment will (and must) trickle down to small suppliers
Climate risk is on everyone’s mind. Between the Biden administration’s Investing in America agenda and recent news around The Greenhouse Gas Reduction Fund (GGRF) $27 billion in funding to create a national network around climate and clean energy projects, along with ongoing news touting climate and energy related projects spurred by the Inflation Reduction Act (IRA), climate is big business. We’re also starting to see the impact of the CHIPS and Science Act investments to support industry and communities, such as Samsung’s $6.4 billion grant in Texas to expand facilities, and Micron’s $6.1 billion to build semiconductor plants in New York and Idaho to name a few. These historic investments are making the US marketplace once again attractive for global companies and capital.
We are also seeing states take notice and think through how these investments affect economic development. For instance, Next Street is seeing this play out in real-time as we develop a strategic report for the State of Michigan Department of Labor and Economic Opportunity (LEO) as they consider a holistic approach to support small and diverse suppliers and their workers with the ongoing Electric Vehicle transition.
3. The intersection of climate investment and economic mobility investment is creating the “New Procurement Economy”
Although it goes by many names, what we’re calling “The New Procurement Economy” was on everyone’s mind. Businesses are thinking about resilient supply chains and the need to build a “second supply chain” to guard against disruptions from tariffs, or other shocks like natural disasters, pandemics, or climate risks.
Corporations need growth in their diverse supply chain to:
- Make good on their diverse spend commitments
- Bring into existence underdeveloped supply chains in nascent industries and growth sectors
- Create resilient supply chains with slack and redundancy to future proof against disruption
These needs spell opportunity and demand for the establishment, investment, and growth of diverse businesses. Speed is of the essence. Already federal funding is flowing, private capital is following, projects are underway, and deadlines are looming. This means supplier development investment needs to move now. Supplier firms need capital and business advice that is specific to the growth opportunities at hand and fit to purpose. General small business support is insufficient to meet this moment.
What would meet the moment? Public and Private sponsored programs and investments that:
- Light the path clearly to where opportunities exist – what buyers are buying, when they need it, and what it takes to sell into these supply chains, as well as clear direction on how to pivot into opportunity
- Make investments into the ecosystems that support supplier firms – providing training, advice, connections, and access to capital
- Connect people and places to opportunity, particularly those that have been underestimated and underinvested
These are just some of the headlines and headwinds that I’m taking away from an incredible conference. I was so heartened to see how small businesses are factoring into the conversations, with corporates, governments, and philanthropic partners thinking critically about how we continue to build an inclusive economy that supports all small businesses, including those historically left behind. Please reach out if anything I mentioned resonates with you – I always look forward to connecting with like-minded partners.
At Next Street, we take these global and macro forces and design solutions to help small businesses navigate them. Want to know more? Contact us to learn how we can help you:
- Leverage public and private investment to develop and scale small businesses and create wealth for people and places
- Make your CSR efforts more effective
- Build resilient supply chains through supplier development programs
- Expand your capacity and build capabilities
- Take it to scale with technology