The connectivity of hip-hop’s entrepreneurial ecosystem

Editor’s note: This post was republished with permission from the Ewing Marion Kauffman Foundation’s Growthology blog.

I’m not a businessman; I’m a business, man!

— Shawn “Jay-Z” Carter

The connection between hip-hop and entrepreneurship is strong. Many hip-hop artists engage in entrepreneurial ventures outside their music creation. The Forbes Five, a yearly ranking of the wealthiest hip-hop artists, illustrates how the top earners have built their fortunes as founders and investors. The list, which includes Sean “Diddy” Combs, Andre “Dr. Dre” Young and Jay-Z, misses how the artists-turned-entrepreneurs develop an entrepreneurial ecosystem through mentorship, new business generation and investment.

Density, fluidity, connectivity and diversity are all important factors in a strong ecosystem. Connectivity, specifically, is never more evident than in hip-hop’s entrepreneurial ecosystem.

Connectivity examines three things in these ecosystems:

  1. Program connectivity: the relationship between programs and resources
  2. Spinoff rate: the links between existing companies and entrepreneurs
  3. Dealmaker networks: investors who have equity in multiple companies

Program Connectivity: “Big Brothers” Jay-Z and Kanye

Mentorship can be an important part of connectivity. In the hip-hop community, there is a long history of more experienced artists mentoring their protégés.

These relationships broaden access to resources and information. For entrepreneurs, it can help them make better, more informed choices that can help their startups succeed.

But mentorship is just one resource that can assist entrepreneurs. Kanye West mentee Lupe Fiasco, along withWaze executive Di-Ann Eisnor, established the Neighborhood Start Fund to help assist potential entrepreneurs. The fund began in Brownsville, Brooklyn but has expanded in nine neighborhoods across the country. The goal of Neighborhood Start Fund is to focus on startups in underserved neighborhoods. The focus is on startups that willgenerate profits that will be invested back into the community in which they started. The fund provides access, networks, workshops, mentoring, and funding in their startups.

Spinoff Rate: Beats by Dre

Entrepreneurial spinoffs are an indicator of vibrant innovation. Hip-hop itself can be thought of as a spinoff of other music genres. Early hip-hop artists had no choice but to go the entrepreneurial route. From Forbes:

“Because they lacked institutional support, hip-hop artists and their early supporters had to innovate. Some of their innovations include securing corporate sponsorship deals for hip-hop events and artists, inventing the concept of street team marketing, and turning artist merchandise into high-fashion clothing lines… By remaining entrepreneurial, rap artists eventually attained unprecedented levels of ownership and control of the rights to their music and brands.”

Hip-hop innovation continues as artists create their own spinoffs. Whether it’s Jay-Z with Roc Nation, Dr. Dre withBeats Electronics, or Russel Simmons with Phat Farm, the vibrancy of the hip-hop community can be seen in its entrepreneurial spinoffs.

Dealmaker Networks: Chronic Dealmaker

Not only are these hip-hop hit-makers starting their own businesses, they are investing in other startups. For example, Nas and Snoop Dogg are two examples of rappers that have grown their net worth through success as investors.

Through his establishment of Queensbridge Venture Partners, Nas has invested in more than 100 technology startups, including Dropbox and Lyft. In addition, he has a strong interest in cultivating other black investors and increasing their numbers, as only 1 percent of venture capital firms are black-owned.

Snoop Dogg invested in Reddit and Philz Coffee, and in 2015, he established Casa Verde Capital, which invests in many fields including technology, health and agriculture. However, it gets the most attention for investing in early-stage marijuana startups.

Entrepreneurship is essential to the U.S. economy because of its ability to create jobs and provide economic mobility. New and young firms are responsible for nearly all net new job creation. In that respect, these hip-hop moguls—like all ecosystem builders—are strengthening entrepreneurial potential.  In the words of Killer Mike, “every time you see a successful rapper, you’re seeing a job creator in a community.…”

Emily Fetsch | Courtesy of the Ewing Marion Kauffman Foundation
Emily Fetsch | Courtesy of the Kauffman Foundation

Emily Fetsch is a research assistant in Research and Policy for the Ewing Marion Kauffman Foundation, and assists in the processing of new grants including grant research, grant write-ups, setting deadlines, and reviewing financials. She also assists in writing literature reviews and informative briefs, and conducts quantitative and/or qualitative analysis on the economy, policy, and entrepreneurship.

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