Pathways to Patient Capital

Background

It’s well known that undercapitalization is the chronic condition for most small business owners. This is especially true for manufacturers who need capital to hire new talent, to invest in research and innovation, to buy equipment, or to invest in the right kind of physical space. Unlike the storied tech sector, few investors lavish capital on an idea or concept in manufacturing. The businesses Mechanism focuses on need to have a product that must already be proven and successful in the marketplace. This takes patience, time, and money—not to mention extremely hard work on the part of the entrepreneur. These challenges loom even larger for entrepreneurs of color who—as a result of inequitable and discriminatory practices in education, employment, and the financial system—experience a yawning wealth gap relative to their white counterparts, depriving them of capital to start or grow businesses.

We assembled our Pathways practitioner cohort because each member has found a successful or promising approach to helping entrepreneurs of color—including makers and manufacturers—to get access to the capital and know-how they need to realize their business ideas and plans at scale.

Beginning in 2018, we brought together eleven community-based capital programs, and an advisory board of capital experts, to learn side-by-side and to collectively dream up what types of capital products and programs are needed to change the investment system in our communities.

These groups came from a variety of backgrounds, ranging from CDFIs with a history of impactful business lending, to municipal government initiatives, to local organizations that view entrepreneurial financing and resource-sharing as a community effort. But they’re all forward-thinking in their approach, and recognize that the challenges around capital access for entrepreneurs of color should be addressed with targeted efforts that mix traditional and groundbreaking financial models, and wraparound services that aid the individual behind the enterprise.

During our time together, we settled on the shared aim of ensuring that manufacturing entrepreneurs—and entrepreneurs broadly—get the holistic support they need to achieve the economic impact they’re capable of.

Throughout the program, we hosted peer-learning cohort sessions, heard from guest lecturers, and supported cohort member-driven exploration of ideas and concepts related the financial product innovation and whole-entrepreneur capital readiness.

We capped off our work together with an in-person Convening in St. Louis.

This work inspired many case studies, reports, webinars, stories, and policy papers. We began by releasing Forging Fairness, an assemblage of successful or promising approaches to helping entrepreneurs of color—including makers and manufacturers—to get access to the capital and know-how they need to realize their business ideas and plans at scale. Forging Fairness gives a sense of both the personal and the practical: one section describes the people and organizations doing this work and the inspiration that guides them (“The Practitioner”); the other describes the innovations in capital access or readiness that each is pioneering or bringing to scale (“The Practice”). Laying The Foundation For Innovative Capital Programs is a brief report out from our in-person St. Louis Convening, drawing out additional themes from our cohort’s time together.

In 2021, we co-authored Advancing Racial Equity and Community Wealth Building through a Sector-Based Approach to Capital Access with the Inclusive Capital Collective. This Black Paper introduces the innovations that capital providers and policymakers can and should implement within the manufacturing industry in order to spark wealth-building among entrepreneurs and communities of color. We highlight along the way the inventive Black, Indigenous, and other POC (BIPOC) manufacturers whose work both showcases the very real challenges they face and the unique possibilities if they are given adequate support.

Based on themes identified throughout the Pathways cohort, we created three Action Guides. These guides provide actionable steps that community-based lenders and individuals can take to provide non-extractive capital to makers and manufacturers of color. Each features one of our cohort members’ works.

Finally, the conversations throughout the cohort inspired three Policy Reports in the years following the cohort itself on the State Small Business Credit Initiative (SSBCI); Succession Planning; and the CHIPS and Science Act. A further report on SSBCI was published in February 2025, acknowledging that SSBCI funding was not reaching most of the nation’s small manufacturers. This paper explores why, lifts up what is working, and shares tactics that states can deploy to reach more of these smaller manufacturers.

This project was led by Lee Wellington, Tanu Kumar, Katy Stanton, and Audra Ladd. Elmer Moore acted as our Pathways Cohort Facilitator.

The team was supported by Johnny Magdaleno and Mark Foggin, our writers, and Patience Wall, our Pathways Fellow.

We are grateful to all of the myriad authors and co-authors of each of the reports.