Forbes Ranks Detroit, Other Xconomy Cities Poorly In Minority Entrepreneurship

4/7/11Follow @xconomy

Forbes recently ranked the best cities for minority entrepreneurs and perhaps not surprisingly, Detroit finished near the bottom of the list.

Despite Detroit’s large African American population, the magazine ranked the Motor City 47th out of 52 metropolitan areas. You can probably blame the usual suspects: lack of venture capital, the loss of population, downsizing of the auto industry, etc. Atlanta, Baltimore, Nashville, Houston, and Miami made the top five.

Here’s what did catch my eye. All of Xconomy’s cities— Seattle (27th), San Francisco (35th), New York (39th), Boston (45th), San Diego (48th)—fared poorly.

What gives? These cities boast dynamic high-tech economies (which is why Xconomy’s there in the first place) and vibrant immigrant communities, who, according to a Kauffman Foundation study, are more likely to start a company.

In the Forbes piece, Jonathan Bowles, president of the New York-based Center for an Urban Future, theorizes that expensive business rents and unaffordable real estate discourage minorities from launching companies in those areas.

Detroit does not have that problem. The city has plenty of cheap land and help for would-be minority entrepreneurs. Kauffman’s Urban Entrepreneur Partnership, for example, is trying to help minority-owned auto suppliers expand into high-tech industries like medical devices and clean energy. BizDom U, a joint project by Kauffman and the New Economy Initiative, mentors and trains minority entrepreneurs and helps find funding for their ideas.

The region, though, is trending in the right direction. From 2002 to 2007, the number of black-owned businesses in the Detroit-Warren-Livonia area jumped 71 percent, far outpacing the national average, according to a recent report by the U.S. Census Bureau. Tax receipts in the area increased 16.9 percent to $3.7 billion.

Most of the businesses focused on repair, maintenance, personal and laundry services, healthcare and social assistance, and administrative support, waste management, and remediation services.

So it seems Detroit’s minority community, at least African Americans, is starting to embrace entrepreneurship. What remains to be seen is whether the region can produce minority-owned high tech startups that attract venture capital and produce high-paying jobs similar to those on the coasts.

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  • http://monkey.org/~dugsong/ Dug Song

    There *are* black venture capital firms, maybe just not in Detroit?

    http://www.syncomfunds.com/

  • Ryan

    One of the reasons for a lack of minority owned high tech startups is the lack of formal education. It doesn’t take phd to start a company, but for high tech startups that are often built on university research, it sure does help. Many startups begin with an idea of commercializing a newly developed technology that is spun out of a graduate school. However, if you look at the enrollment rates in science and engineering programs for minorities, it’s pretty obvious why that’s not happening. This is why some of the programs that are developed to increase the number of minorities not only going to college but studying in the STEM fields, graduating with a degree, and then going on to graduate school, are so important. Entrepreneurship in the minority communities is picking up, but until graduation rates for masters and phd’s increase, there will always be a lack of high tech startups with minorities at the helm.