Duluth’s Entrepreneur Fund began as a response to a recession in the Iron Range, and has become a true job creator
Eric Faust, a Stillwater native, dreamed of moving to Duluth and opening a coffee roastery on the shores of Lake Superior. He always had a passion for coffee, and had worked for years as a barista and coffee journalist (yes, that job exists). He also knew that the specialty coffee market in Duluth was virtually untapped; nobody was roasting high-end, single origin coffee beans with care. A strong personal factor in the decision to head north was the stunning natural beauty of the North Shore and its quality of life. “I chose to start my business in Duluth for purely selfish reasons,” Faust jokes.
His biggest challenge, like that of many entrepreneurs, was to obtain start-up capital.
In the early planning stages of the envisioned Duluth Coffee Company, Faust was working with a Twin Cities-based angel investor, but felt that this type of financing relationship compromised the vision of his business. In 2008, he met Michael Lattery, the director of business finance at the Entrepreneur Fund, a Duluth-based organization with an office in Eveleth that was originally known as the Northeast Entrepreneur Fund. Lattery worked with Faust to help him develop a business plan between 2008 and 2011, and encouraged him to apply for a startup loan from the fund to buy a coffee roaster and get his business up and running.
Entrepreneurship Fights Unemployment
The Entrepreneur Fund was founded in 1989 by Mary Mathews in response to the mining industry downturn and general economic recession, says Shawn Wellnitz, the organization’s CEO. “The region lost about a third of its mining jobs during those years,” he says. “In response, local leaders began turning to entrepreneurship as a means of revitalizing the economy and bringing jobs back into the area.” In its early days, the Entrepreneur Fund offered microloans of $25,000 or less and basic business classes to help the newly jobless affected by the recession and mining layoffs. The idea was to help out-of-work miners start businesses as a means of creating their own jobs.
Although the Entrepreneur Fund has its roots helping those in the mining industry, the businesses and individuals it works with today come from a wide variety of sectors. Beneficiaries include entrepreneurs across many industries, from specialty coffee to craft brewing, advertising to fashion photography. The size of the loans has also risen, with some reaching $250,000.
Faust has been awarded three loans from the fund, which has enabled him to open a retail store and coffee shop in Duluth, after starting out selling roasted beans wholesale. “They’ve been our only source of financing so far,” says Faust. After seeing nearly 50% growth over the past year, Faust believes the Duluth Coffee Company will soon be in a position to negotiate a loan with a bank. “There is a lot of risk associated with a business like the one I wanted to start,” he says. “The Entrepreneur Fund was willing to take that risk.”
Focus on Women
A big effort in the recent history of the organization has been to encourage and support women entrepreneurs. The Entrepreneur Fund formed a partnership with the Women’s Business Center (WBC), a national initiative sponsored by the U.S. Small Business Administration to help grow women-owned businesses and address problems specific to women in business.
According to Meg Thoreson, the Entrepreneur Fund’s WBC director, women face unique challenges in the businesses world.
“For women, business ownership can offer a path to self-sufficiency,” Thoreson says. “The way they approach business ownership is often different from men, however.” For example, women approach risks differently, she says, noting that many women business owners are often deeply invested in raising and supporting families at the same time they are starting and running businesses. There are a lot of spinning plates in play for women entrepreneurs.
Thoreson has first-hand experience with small business ownership. She and her husband own a hardware store, liquor store and sporting goods store in northwestern Wisconsin, where she was involved in daily operations until she took on her current position at the Entrepreneur Fund.
Ultimately, Thoreson says, the WBC exists to bring businesswomen together in a network in which they can support, encourage and inspire one another to succeed. Toward this end they host an annual Women’s Business Weekend, Women’s Entrepreneur Mastermind Groups, and provide mentor entrepreneurs. In 2015, the WBC will launch Ignite — a program that provides dedicated training and resources to women entrepreneurs who want to grow revenues and jobs in Northeast Minnesota.
Good Track Record
Since its inception, the Entrepreneur Fund has helped more than 1,300 businesses by providing more than 450 loans totaling $15 million, says Wellnitz. He figures that 11,000 people have been served and 3,500 jobs created or supported. Of the businesses that have received funding from the Entrepreneur Fund, over 85% are still in business after two years.
In February, the Entrepreneur Fund was chosen as one of two dozen small business lenders in the nation to participate in the Small Business Finance Collaborative, an intensive technical assistance program created by the Opportunity Finance Network (OFN) and Goldman Sachs 10,000 Small Businesses to increase small businesses lending nationwide.