In a bid “to change the face of entrepreneurship” in Pittsburgh, the city’s Urban Redevelopment Authority announced Thursday the first three businesses to receive loans from a pilot venture fund that seeks to support minority and women entrepreneurs.
URA Ventures’ first cohort includes event planning company Blanket & Board, the coffee shop Hazelwood Café, and Live Fresh Cold Pressed Juice + Smoothie Bar. Live Fresh has locations in Homestead and the North Side. Each winner was awarded a revenue-based loan, with Blanket & Board receiving $50,000, Hazelwood Café $40,000 and Live Fresh $100,000.
The URA’s chief strategy officer, Thomas Link, noted Thursday that the URA Ventures received well over 100 applications for investment since launching in March — far more than the $3 million fund can support. Rather, Link said at a URA board meeting that the pilot would likely finance between 25 and 30 businesses. He said it has stopped accepting applications.
“Hopefully, it’s only temporary,” he said of the pause. “But we feel it's important to ensure that we can provide excellent service to those who have applied, make sure we can get through the initial round of closings, make sure those who candidly, we may not end up closing with, we're able to connect with and work to make sure they're aware of and have access to all of the suite of programs we have at the URA to support small businesses.”
The URA unveiled its venture pilot this winter, citing a need to connect more women- and minority-owned businesses with capital. Pittsburgh has the lowest rate of Black business ownership compared to 50 metro areas nationwide, according to a February study.
“Social impact” initiatives such as URA Ventures have gained traction partly due to the heightened focus on racial equity following the Black Lives Matter protests of 2020. By prioritizing support for women and racial minorities, however, such programs have drawn legal scrutiny as possibly amounting to unconstitutional discrimination.
The Texas-based American Civil Rights Project sued leadership at Starbucks Corp. last month over its plan to diversify its staff, suppliers, and advertisers. The conservative think tank had previously objected to the city of Pittsburgh’s now-canceled plan to prioritize low-income households led by Black women for an extra $500 in monthly cash assistance.
URA Ventures hit a snag in July when one of its managers, former URA assistant director of business solutions Devin Abraham was placed on paid administrative leave and is no longer with the URA. A spokesperson said the agency doesn't discuss personnel matters.
The departure appeared to delay the review of potential URA Ventures investments. In a July 12 email obtained by WESA, Abraham told funding applicants that any meetings they had scheduled with URA Ventures staff had been canceled. He did not say why but acknowledged that the cancellations would slow down the application, due diligence, and closing processes.
The next day, however, URA Executive Director Greg Flisram assured applicants in a separate email that the pilot program remained “active” with URA Ventures staff ready to answer entrepreneurs’ questions.
Daniel Lavelle, URA vice chair and Pittsburgh city councilor, attributed the high demand for URA Ventures money to the underperformance of other local funding sources.
“There's clearly a need here, and we're [at the URA] clearly filling a void that, unfortunately, the private sector, the philanthropic sector, the banking sector is not fulfilling,” he said at Thursday’s meeting.
“I would just simply encourage the philanthropic community, the banking community, the private sector to partner with us so that … we can hopefully support the next three [businesses], the next six, the next nine — and especially given that these are women-owned, minority-owned businesses, which are critical to our region, that we could help build that out.”
In its announcement Thursday, the URA said Hazelwood Café specializes in selling African coffee and highlighting the product's history. Blanket & Board, a minority-owned firm, hosts pop-up, luxury picnics and caters private events, according to the statement. Live Fresh, meanwhile, serves juices, smoothies, and other healthy food options, the statement said.
URA Ventures runs three investment programs. It will finance its first cohort through its Main Street Ventures arm, which lends up to $100,000 to small businesses at an interest rate of 3%. Firms pay back the loan as they generate revenue. The URA hopes this approach will encourage business owners to commit to long-term growth and job creation within the community.
A second program, Pittsburgh Entrepreneur Fund 2.0, invests in minority and women-owned enterprises in innovation and technology-based fields. Those firms may apply for up to a $125,000 loan at an interest rate of 8%. They, too, could use profits to repay the money, or the URA could gain its return when the companies are sold or attract more funding.
Last, the fund's Venture Co-Investment initiative similarly focuses on innovation and tech businesses based in Pittsburgh. It will make the URA a limited partner in other investment funds that are run by women and minority managers or have goals that align with the URA’s.
The agency plans to invest up to $750,000 through the co-investment program while URA Ventures remains in the pilot phase.
On Thursday, URA board chair Kyle Chintalapalli, who also serves as the chief economic development officer for Pittsburgh Mayor Ed Gainey, expressed hope that URA Ventures will attract additional funding from the private sector and grow beyond the pilot stage.
