Report: Richmond's small business growth is "defying the odds"

Richmond's small business community is thriving, particularly in some of the neighborhoods the city targeted for growth in its master plan , according to a new report from Capital One.

Why it matters: Richmond's post-pandemic recovery, community-supported small businesses and entrepreneurial ecosystem could serve as a model for other cities looking to support their local business sector, the report found.

The big picture: Capital One Insights Center — the NoVa-based bank's research center that focuses on advancing equity and inclusion — partnered with Mastercard to review transaction data at more than 10,000 Richmond small and medium-sized businesses between 2019 to 2023.

• The research aimed to better understand small business trends in midsize cities, especially since much of consumer spending shifted to larger and online companies during the pandemic.
• The bank selected Richmond for the study because Capital One was founded here 30 years ago. It's also Richmond's largest private employer.
• "We've always known there was something special about Richmond," Insights Center president Shena Ashley tells Axios.

What they found: Richmond's locally owned businesses have nearly recovered from the pandemic, and they're growing at a faster rate than they were pre-pandemic.

• The report also found that spending at small businesses in Richmond surged 75% compared to 2019, significantly closing the gap between how much money goes to big businesses vs. smaller ones.
• The growth and recovery were most pronounced in downtown Richmond, including Jackson Ward, and parts of Southside, including Manchester, the Forest Hill corridor and around Southside Plaza.
• These are neighborhoods the city identified for growth in Richmond 300 , the city's master plan, which the report credits for its development strategy focused on specific neighborhoods.

Richmond's strong Black, Latino and woman-owned business sector and the community-based groups that help support them, including the Metropolitan Business League and the JWC Foundation , also stood out to the report authors and partners.

• Richmond is "defying the odds" compared to national trends with restaurant ownership and its Black and Latino-owned businesses success, Ginger Siegel, Mastercard's head of North America Small Business, tells Axios.

Yes, but: Richmond has one problem it should address when it comes to its small business community, Ashley says: It doesn't brag enough.

• "It needs to tell its story," she says. "We should be hearing about Richmond more."

Zoom in: Consumer spending in Manchester and adjacent South Richmond neighborhoods increased by 44% between 2019 to 2022.

• Those neighborhoods also saw a 41% increase in the number of small businesses in the same period.
• Downtown Richmond, including Jackson Ward, did even better; it saw a 49% increase in consumer spending at neighborhood businesses from 2019 to 2022. It also had 24% more small business openings in 2022 compared to 2019.
• This suggests Richmond's downtown is recovering at a faster rate than many other cities in the nation, per the report.

The intrigue: Recent land-use changes to allow residential construction in once industrial sections of town, a focus on mixed-use and transit-oriented development and eliminating parking minimums were critical to Richmond's success, the report found.

• These changes encouraged development that offered locals more places and neighborhoods to live in, along with storefronts for more new businesses. That brought people and commerce to once sleepier parts of town like Manchester and downtown.

What they're saying: Richmond's small business growth didn't happen by accident, Ashley says. It was a concerted effort of multiple community partners and the city government working to support each other.

But perhaps the biggest driver of Richmond's success is its people, Siegel says.

• "There are a lot of communities that didn't rally around their small businesses during COVID. Richmond did."