February 13, 2018 | Patrick Rehkamp | Source: Minneapolis/St. Paul Business Journal
The Metropolitan Economic Development Association announced Tuesday it received $1 million from a Philadelphia organization to invest in early-stage minority-owned businesses through a business-plan competition.
While the Minneapolis-based nonprofit — which provides consulting to minority-owned businesses in the Twin Cities — loans money to businesses all the time, it’s expanding its services to actually invest in the companies, and hopefully receive a payout down the road should any of the businesses get acquired.
With the money, MEDA plans to hold an event similar to the television show “Shark Tank” where people pitch their business plans and the most promising ones receive seed money.
“It’s a different type of instrument,” said Gary Cunningham, the CEO of MEDA. “Because this money is more investment-type money, we go through kind of a ‘Shark Tank’ process with businesses that compete. The last time we did this we had about 35 businesses [participate].”
The money is from Philadelphia-based Opportunity Finance Network, which a national umbrella group for community financial-development institutions. MEDA will award the money within the next few months and provide capital for up to six minority-owned startups, Cunningham said.
“We’re really investing in these businesses,” he said. “If a sale happens, we would share in the profits.”
MEDA’s goal is to get to $50 million in terms of support for metro-area minority-owned businesses. Once it does, it expects to be able to support itself through interest payments and the like. Cunningham is hopeful of hitting that mark since he the organization will reach $20 million this summer, which was the original goal three years ago.
In total, the Opportunity Finance Network received $5 million from Wells Fargo and Prudential Financial to make awards to various community financial development institutions. Wells Fargo, the the second-largest bank in the Twin Cities based based on metro-area deposits, provided an unknown percent of the $5 million.
Read the full article from the Minneapolis/St. Paul Business Magazine here.