Incubator could close without state support

PBN PHOTO/ MICHAEL SALERNO PERSEVERANCE: Urban Ventures Executive Director Jr Neville Songwe, second from left, meets with staff and microbusiness owners. The public incubator, which continues to operate, is at risk of closing due to loss of funds.

PBN PHOTO/ MICHAEL SALERNO PERSEVERANCE: Urban Ventures Executive Director Jr Neville Songwe, second from left, meets with staff and microbusiness owners. The public incubator, which continues to operate, is at risk of closing due to loss of funds.

By Eli Sherman | Sherman@PBN.com

2/23/17

A business incubator created by state law is at risk of shuttering due to a lack of support from the legislature that fashioned it.

Urban Ventures, a legislatively created incubator based in Providence, was originally formed to support companies predominately owned by racial minorities in urban areas. The incubator, however, has morphed over the years, and now supports Rhode Island's smallest businesses – or "microbusinesses" – throughout the state.

"The distinction between ‘urban' and ‘not urban' is not so clear, so when Urban Ventures started receiving folks from all 39 cities and towns, it was hard to say, ‘We cannot help you,' " said Jr Neville Songwe, executive director.

Urban Ventures, however, ran into a funding problem beginning last legislative session when the General Assembly slashed its budget.

The incubator, created under the arm of R.I. Commerce Corp., was previously funded with a $140,000 community grant. But the grant program came under heavy fire last year when it was discovered that former House Finance Chairman Rep. Raymond Gallison, D-Bristol, was associated with one of the organizations receiving money.

Gallison, it turned out, was involved in other nefarious activities, and in January pleaded guilty to nine criminal charges related to theft from a dead man's estate and theft from a special-needs trust.

The former lawmaker's illicit behavior, however, contributed to Urban Ventures losing its yearly budget, leaving the incubator with zero funding. The group is using what little reserves it has to keep the lights on and provide continued services, while scrambling to find a solution.

"Worst-case scenario is simply Urban Ventures will no longer be able to serve," Songwe said. "The community would lose a resource that has taken the time to understand it."

Urban Ventures was formed in 1999 as part of an urban-economic initiative. The state initially funded the incubator with $250,000 each year. To date, Urban Ventures has helped 500 businesses throughout Rhode Island with development assistance, education, training and consultation, according to its annual report.

Today, the organization focuses on microbusiness – which it defines as a company with five or fewer employees, small enough to require initial capital of $30,000 or less. Urban Ventures has 169 clients in its portfolio right now, and 21 new clients joined in 2016.

"If you did an economic-benefit study, looking at the budget of Urban Ventures, the number of clients they deal with … it has the best value of any economic-development program provided in the state," said Edward M. Mazze, Michael A. Duane endowed chair in business innovation at the University of Rhode Island.

Mazze, who is also an Urban Ventures board member, says he's tried to make this point to every new governor and lawmaker who has taken a position of leadership since Urban Ventures started, swearing by the organization's low-cost, high-impact nature.

But his words always fall "on deaf ears," he said.

"Entrepreneurs are coming from areas that in the past you didn't see. It's women, Hispanic and Latinos, African-Americans, Asian-Americans and East Indians," Mazze said. "In Rhode Island, that's where the action is, and if you look at the legislature and executive branch, you don't see many individuals in those groups."

Songwe says Urban Ventures will now work with anyone from "any walk of life," because he sees it as a public program designed to serve all Rhode Islanders. Nonetheless, the individuals seeking help from Urban Ventures are still mostly racial minorities. Sixty percent of Urban Ventures' portfolio is Hispanic or African-American.

Mazze says it is these types of minority-owned microbusinesses that truly need state support.

"I'm delighted that General Electric [Co.] is here. I'm delighted we're attracting and keeping big businesses. But they can fend for themselves," Mazze said. "What are we doing for the one-person, or two-person businesses, which are the hallmark of Rhode Island?"

Songwe is actively lobbying state lawmakers to take another look at Urban Ventures, to consider reinstating its budget. He's also using an $8,000 legislative grant received last year to host the first-ever Microbusiness Summit this spring. He's hopeful the event will draw attention to the importance of supporting the state's smallest businesses.

"If we do our jobs well, we should be able to build a good pipeline, and be the first in the nation to have a microbusiness arm that gives employers the resources and assets they need to grow into small businesses," Songwe said. •