“We could leave the target at just creating a job, but our perspective is that every job isn’t created equal. It’s not the easy path,” says Michael Jeans, president of Growth Opportunity Partners.
Jeans, born and raised in Cleveland, left a career in traditional finance to get Growth Opportunity Partners up and running as Cleveland’s newest community development financial institution (CDFI). Their public launch event was a year ago this month.
From the beginning, Growth Opps (as it’s known) has committed to using capital to support meaningful wage jobs, which they define as jobs that provide at least a living wage plus one or more benefits like healthcare, paid time off and/or a retirement component, in order to, Jeans says, “address the wealth gap issue.”
“We specifically focus on lending for components of a small business that are directly correlated to its growth. Those areas are mainly equipment finance and working capital, which we intend to support meaningful wage jobs,” Jeans says.
They approved 11 loans in their first year, with an average loan size between $200,000 and $250,000. They’re set up to go as low as $100,000 and as high as $750,000. Growth Opps has set itself a maximum of $1 million lent to any one client.
“We want to be sure after making one loan, even if it was $750,000, but they need to continue growing, we can support that growth with another round of capital,” Jeans explains. He anticipates Growth Opps will make 35 to 40 loans over the next three years.
And they will be strict on the meaningful wage jobs commitments. “Just like a home loan from a bank, if you buy a motorcycle and pocket the rest the bank’s not going to be happy with you. So it is for us, for meaningful wage jobs. It’s a default if the business has to use it for something else,” Jeans says.
A year into it, they’re already exploring how to measure impact even more deeply. “If median income in a community is $20,000, we need to create opportunities that are north of that to create economic development. And learning that we also realized we need to consider impact at the household level, how many people really are living off of that salary or wage,” Jeans says.
One current borrower, Careertown, hosts virtual career fairs for universities, broadcasters and other clients. Growth Opps has lent them $270,000 so far, which Careertown plans to use to help hire five to 10 new meaningful wage employees over the year. More than 4.2 million job seekers have used Careertown’s platform. They often partner with universities, including historically black colleges and universities, to host virtual career fairs for their students and alumni. They’ve also partnered with TV and radio broadcasters on hosting career fairs for their audiences.
“We’ve historically promoted workforce diversity, especially with Careertown spinning off of an historically African-American newspaper, the Columbus Post,” says Orville Lynch Jr., CEO of Careertown, which incorporated as a separate venture in 2013. “We’ll be specifically hiring to further enhance our sales infrastructure to serve businesses in the Cleveland market seeking talent.”
Careertown also recently moved to a new headquarters in Cleveland’s Hough neighborhood, which is still recovering from racial discord that culminated in July 1966 riots that deeply scarred the community.
“We really wanted to be in a census tract that lends itself to creating a difference in a community. It’s a personal mission to be able to promote inner-city development, so the location was a natural fit for us,” says Lynch.
Careertown’s new headquarters is just seven blocks from Growth Opps’ offices, located inside the offices of Growth Opps’ parent organization, JumpStart Inc.
“It was important for JumpStart to be located in this community, which made it very easy for Growth Opps to locate here as well. We wanted the community to know we are here, we’re neighbors and we’re close,” Jeans says.
JumpStart has invested $38 million in 75 startups so far, all based in the region, attracting $700 million in follow-on investment. More than 30 percent of the startups JumpStart has advised or invested in are owned or led by women and minorities. JumpStart got started by leveraging public and private dollars under Ohio’s 10-year, $2.1 billion Third Frontier initiative, created in 2002 and funded through a statewide ballot initiative, which got renewed for another 10 years in a 2010 ballot initiative.
But the Cleveland region has more than startups. Established businesses were feeling left behind and left out. Growth Opps was created in part to tackle that perception directly. As part of their initial outreach, they are conducting a series of events in different underengaged neighborhoods throughout the city. Titled “The Well Being of the Citizen,” and hosted by Growth Opps through a grant from Citizens Bank, the events seek to engage leaders and community partners to discuss what could be possible, now that the business support ecosystem JumpStart has helped build in the past decade can be combined with capital from Growth Opps to support established businesses in the region’s low- to moderate-income neighborhoods.
“We’re raising the bar of expectations for these communities to know that these resources are not just reserved for what they may have hypothesized as others, that these resources are available to them too,” Jeans says. “We’ll meet them in their communities, communities I know and love. Communities that raised me.”
The Equity Factor is made possible with the support of the Surdna Foundation.
Oscar is editor of Next City. Before that, he was a contributing writer and Equitable Cities Fellow for Next City. Since 2011, Oscar has covered community development finance, community banking, impact investing, equitable and inclusive economies, affordable housing, fair housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha, and Fast Company.