“Is this your family’s business?” Marianne Lancaster often was asked when she was starting Lancaster Packaging, Inc. Or even, “Is this your husband’s business?” The answer was always, “No, this is my business.” As an African-American woman, she started a company that has become a major supplier of wholesale packaging and industrial supplies to Fortune 500 firms. It occupies two large warehouses in Hudson, Massachusetts, employs 20 workers, has $18.7 million in annual revenue—and is poised for the next step. “The main thing holding us back? Access to capital.”
Enter the Business Equity Fund, a partnership of Eastern Bank’s Business Equity Initiative (BEI), the Greater Boston Chamber of Commerce’s Pacesetters Initiative and the Boston Foundation. At first, Lancaster was slightly leery about it, since past efforts to support minority-owned businesses have fallen short. After speaking with BEI Executive Director Glynn Lloyd, she was convinced to apply.
Now, Lancaster Packaging is the first company to receive an infusion of capital from the Business Equity Fund at the Boston Foundation of $350,000. The goal is to increase the company’s revenue to $27 million and add 10 employees by 2020. Lancaster adds, “This investment will help us jump start our own next phase and go so much higher.”
The Business Equity Fund provides alternative financing and access to capital for qualified businesses owned by people of color that have been constrained by conventional financing practices. The Fund works alongside two other programs, forming an ecosystem approach.
Eastern Bank invested $8 million in BEI, with the goal of helping minority businesses grow and thrive. The businesses are carefully vetted and matched with a strategic advisor—an experienced business executive who helps them develop and implement a strategic growth plan. The BEI team and the Greater Boston Chamber of Commerce partnered to create the Pacesetters Initiative to encourage Chamber member organizations to use their collective purchasing power to create opportunities for local enterprises of color, particularly BEI participants.
Finally, the Business Equity Fund at the Boston Foundation provides access to growth capital for the businesses. The Fund is designed to provide both flexible financing and patient capital that produces a modest return so, ultimately, it can be self-perpetuating. With a $2 million initial investment from Eastern Bank, the goal is to grow the fund going forward. Access to growth capital is a cornerstone of the approach and early results are eye-opening.
After only a year, the first 10 participating businesses have hired a total of 88 employees and added $11 million of revenue, in aggregate. Many have improved their organizational designs and created strategies to enter new markets or make acquisitions.
“We know that, as these companies grow, they will not only thrive,” says Orlando Watkins, Boston Foundation Vice President for Programs, “they will employ more people and build more wealth for people of color. And that will lift everybody up.”