Alfa Demmellash co-founded Rising Tide Capital in 2004 to empower underserved urban entrepreneurs in northern New Jersey to start and grow successful businesses. Born in Ethiopia, she left at the age of 12 to start a new life in the US. She went on to study at Harvard and was named a Young Global Leader by the World Economic Forum in 2015.
What gave you the urge to set up your organization? What problem were you trying to solve?
Twelve years ago, my co-founder Alex Forrester and I saw the need for localized action to build the basic infrastructure for entrepreneurial capacity-building in economically distressed communities plagued by persistent unemployment, under employment and multigenerational poverty.
We believed that with the right infrastructure in place, the entrepreneurial talent that exists in these communities could be harnessed and equipped to start new businesses, and create a network of inter-dependent yet self-sufficient and resilient local leaders ready to tap into 'a rising tide of opportunities', solve emerging local problems, and co-create a culture of hope, curiosity, empathy, creativity and abundance.
I knew firsthand how entrepreneurship could transform a life. When I was just two, my mother escaped a brutal dictatorship in Ethiopia, and came to the US as a refugee. While working as a waitress, she started a business in fashion design which made it possible for her to save enough to bring me to the US at the age of 12.
My studies at Harvard took me to post-genocide Rwanda, where I observed again the incredible role entrepreneurial energy and resilience played in rebuilding livelihoods and communities. At the same time, it was clear to me, based on observing my mother’s struggles in the US as well as the countless women entrepreneurs across Rwanda, that the world has invested very little in building an inclusive infrastructure for hyper-local creativity and innovation that is central to stemming economic fear.
Your website says your goal is to 'assist struggling individuals and communities to build strong businesses which transform lives, strengthen families, and build sustainable communities'. What's your model for achieving that?
Simply, entrepreneurs need to be equipped with capital in all of its different iterations to create businesses that stand the test of time:
Knowledge capital: They need the education to convert an idea, a hobby, or talent into a product or service that people what to purchase.
Social capital: They need an ecosystem of local support services and a network of like-minded individuals to create an environment that nurtures them to achieve success.
Financial capital: “Right-sized” financing at the opportune moment for entrepreneurs can be the catalyst for exponential growth of their businesses.
Can you share a few stories of how the companies you’ve helped thrive are changing their local community for the better?
We have so many entrepreneurs that are creating changes in their communities:
Myani Lawson is lowering the barrier to high quality early childhood education in her community. We know of approximately five Rising Tide Entrepreneurs whose kids attend Myani’s school.
Gustavo Estrada is providing behavioural health services to families in their native language which increases the effectiveness of the services.
Universe Konadu is empowering at-risk girls through literacy, visual and performing arts.
Simon Peters believes his mission isn’t just to repair wheelchairs but to provide dignity to his customers by providing them with access to mobility.
You help struggling entrepreneurs turn around their businesses. What’s the most frequent challenge you see these people face, and how do you help them overcome it?
Often, many entrepreneurs are challenged by the overwhelming nature of managing the various competing priorities of their business, hampering their ability to be effective decision makers. As solopreneurs, they are responsible for more than just coming up with the ideas that keeps their business relevant to their target market—they are responsible for sales, marketing, fulfillment, quality control and financial management. When their businesses start growing and they begin to hire employees, this adds another layer of complexity to their businesses.
Rising Tide Capital’s business management education and coaching services have been designed to meet entrepreneurs where they are and work with them to build the confidence it takes to pause, to experiment, to pivot and to build new operational systems. We emphasise continued business planning above business plans—and we encourage our entrepreneurs to consider all the aspects of their circumstance that can affect their success, to balance their time and financial resources with their goals.
Is the model working? For example, have you got figures on business survival rates, incomes after graduation, student profiles etc, that you can share? How do you take this to the next level? Nationally? Internationally?
Yes, the model works! While I shared some of our entrepreneur profiles above, that show success of individual entrepreneurs, we also do have a data-driven approach to our work. Here’s what the data is telling us:
On average, Rising Tide Entrepreneurs have an 87% average survival rate beyond the 5-year mark as compared to the national US small business rate of 50%
For those entrepreneurs who are already in business when they come to us, we see a 64% increase in average business sales, alongside a corresponding 47% increase in average household income within two years of graduating from the Community Business Academy.
Within two years of graduating from the CBA we also see a 56% decrease in graduates’ use of public assistance as well. In 2015, Rising Tide Entrepreneurs created 73 businesses, a new one every five days.
Taking this to the next level means supporting other social entrepreneurs and organisations across the US and the globe to have access to a back-end infrastructure that gives them the platform to start and grow this work in their communities while innovating and adapting the model to fit the needs of their particular communities.
What one piece of advice would you give to someone who has a hobby or passion that they want to turn into a business?
Building a business is just like starting at a new job. So pick a start date, give yourself a title and write up a mini job description for yourself and a description of what need or want your hobby or passion can fulfil for someone else.
Then you might start playing around with what you can do to add value, to make your offering better or more attractive. Think about what it might cost you to be able to add this value because all of your costs have to be reflected in your price to make sure you are not losing money or undervaluing what you are planning to bring to the market place. Setting a price for goods or a service is often a point of great difficulty for most entrepreneurs, even those that have been in business for a long time. Just remember, it is a lot harder to raise your prices once you are in the marketplace than it is to bring them down.
Also, remember that part of your job description is being the face of your product or service. So, being friendly, open to critique, willing to acknowledge a mistake, curious, listening deeply, being empathic (walking in the shoes of your potential customers) are all qualities that are essential to your success.
Is there anything policymakers can do to make life easier for budding entrepreneurs?
Policymakers, particularly those who are thinking about the future, need to understand that budding entrepreneurs are the glue that will keep communities resilient, positively engaged, and economically hopeful — they are essential for a peaceful and still-free society.
As a result policymakers, particularly at local levels, need to make it easy for budding entrepreneurs to start their businesses, make paperwork and administration related to registering a business, paying taxes, getting special licenses as easy and streamlined as possible. They should make broadband and access to the internet as broadly available as possible. They should invest in organisations like Rising Tide Capital with an eye towards building a robust ecosystem for entrepreneurial development across localities in every region, rural or urban.
They should also have a set of policies designed to strengthen "inclusive local economies" whereby they boldly legislate not only the inclusion of women, minorities and other traditionally excluded populations but also the inclusion of humans into the basic technology-driven economic models of the future.
You left a war-torn Ethiopia when you were still a child and moved to the US. You went on to study at Harvard and co-found your own company – the 'American dream' in action. Is that dream still a reality for most people in the country?
The 'American dream' is changing rapidly from one that is entirely about the ability of rugged individuals to pull themselves up by their bootstraps, to one in which communities of interdependent individuals with a great deal of self-awareness and hard work, continue to innovate and create new companies focused on well-being and creativity. As the fearsome reality of technological unemployment approaches, the new 'American Dream' is evolving into a 'Human Dream', where success is no longer about maximising material gains but rather unleashing authentic creativity, to build a thriving, meaningful, creative, human-scale well-being economy that is bringing basic resources as well as fulfilment.