Results of the 2020 Washtenaw County Capital Report were released Oct. 15, offering insight into the overall landscape of investment activity in Washtenaw County.
With the goal of building a more inclusive economy for all residents, the Ann Arbor Area Community Foundation (AAACF) commissioned the report and hired Ypsilanti-based investment advisory firm Revalue to lead the local data collection, analysis, and solutions building. They also partnered with EntryPoint to implement the research project and hired Urban Institute to conduct a capital flow analysis of institutional investing. Concentrate is part of the team's unpaid Advocacy Group, which is working to promote the project to the community.
Revalue CEO Angela Barbash says a key takeaway came from a survey administered by EntryPoint, which asked companies where their capital comes from and how much capital they will need in the next three years. The survey focused on businesses in five sectors: independently-owned main street businesses, food systems businesses, education businesses,
real estate businesses, and caregiving businesses. Survey results showed that most of those businesses are funded by individuals.
"The majority of businesses are not getting capital from their own cash reserves, credit cards, banks, venture funds, or angel funds. They're getting it through individuals in the community, friends, family, and community networks," Barbash says.
She adds that the results of the survey indicate that there is "a pretty robust underground capital circulation economy that no one has visibility on."
For Barbash, this is good news. She shares that about five years ago the Washtenaw County Office of Community and Economic Development paid Revalue to do a feasibility study on creating a local investment fund. In that study the Revalue team questioned the pipeline or investment opportunities that existed in the region. They had speculated that there was not enough deal flow to actually create a viable fund and that such an undertaking would need "a three-county footprint."
However, the new report shows that businesses surveyed will collectively require over $600 million in capital in the next three years.
"Clearly there is deal flow and opportunity to invest," Barbash says.
AAACF CEO Neel Hajra says that $600 million represents a large opportunity. He says the 150-page report has established a baseline of knowledge to give everyone a roadmap to what might be challenging about investing locally, and it sets the stage for "hundreds of conversations" about potential paths forward.
Hajra adds that another important takeaway from the report is the lack of access to capital for women and people of color.
"We talk a lot in our community about economic mobility and empowering people to make their own decisions about their lives," he says. "But we've found that investment capital and business capital – the very stuff that allows people to start and grow businesses – isn't equitably accessible across Washtenaw."
Moving forward, creating more knowledge and visibility of the report findings will be a priority.
"We're talking about our path forward and finding out what private and individual investors, cities, the county, and other other public sectors can do," Hajra says.
He says AAACF has already pivoted to take action on the report findings by announcing a $250,000 investment in Michigan Women Forward. The group will redeploy AAACF capital investments to women- and minority women-owned businesses, with a focus on Ypsilanti and rural areas in the county.
"We're going to put our money where our mouths are and where our research is," Hajra says.
Jaishree Drepaul-Bruder is a freelance writer and editor currently based in Ann Arbor. She can be reached at jaishreeedit@gmail.com.
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