We define Creative Businesses as facility, input, production, and distribution businesses in arts, design, culture, and innovation industries that are run sustainably, provide quality jobs and have a social impact.
We identified industries connected to art, culture, design and innovation beginning with the list of 70 North American Industry Classification System (NAICS) codes that were common to 50% or more of the reports examined in the study completed by the Creative Economy Coalition.1 This list includes businesses connected to design, entertainment, publishing, broadcasting, advertising, arts education, fashion, and food. After consulting other creative economy definitions, we identified 74 additional codes for industries where we think substantial creative economic activity occurs, for a total of 144 NAICS codes. See how Upstart Co-Lab defines the creative economy by industry here.
We concede that not all businesses within these 144 NAICS codes are a perfect fit: NAICS codes are not granular enough to separate creative from non-creative businesses within a singular industry. For this reason, most measures of the creative economy tend to exclude industries where there is ambiguity, undercounting the total size of the creative economy.
The three categories where the ambiguity is greatest are food, the manufacturing and sales of tangible goods, and health and beauty.
- Food – NAICS codes connected to food are mostly excluded from the definitions of creative economy examined in the CEC study. The only reports to broadly include food related codes were prepared by the Louisiana Office of Cultural Development, a place with historically strong ties between food and culture.2 Some food categories like breweries, wineries, baked goods stores, confectionery and nut stores, and full-service restaurants were included in a handful of other reports.3 For example, food businesses that are the epitome of creativity—such as Jeni’s Splendid Ice Creams, a certified B Corporation that produces artisanal ice cream, founded by artist Jeni Britton Bauer—are in the same industry category as fast food companies. While not all food-related businesses are creative, many are. The Perennial and Greenbelt Hospitality are two such examples.
- Manufacturing and Sales – Few would dispute that fashion designers, toy designers, and furniture designers are doing creative work and are part of the creative economy. But when it comes to manufacturing and selling the products generated by these designers, there are many paths to market. In some cases, the act of designing a product is divorced from manufacturing and sales. But in other cases manufacturing and sales are vertically integrated with design work, and are as much a part of the creative process as the design itself. Two examples are Opportunity Threads and UrbanPlough Furniture.
- Health and Beauty – Some businesses in the health and beauty sector are tied to culture. Hair care and styling, nail care, and body art including tattoos and henna are bound to identity and culture for many racial and ethnic groups.4 For example, hair salons and barber shops have long been community gathering places, especially in African-American communities.5 Today we see community health and beauty businesses doubling as creative spaces, as well as offering clients an opportunity for personal creative expression. Health and beauty businesses like Let Em Have It Salon and Nailbot meet all of the requirements to be a Creative Business and should not be excluded from consideration as investment opportunities for impact investors eager to support creativity just because other health and beauty businesses do not meet those standards.
Upstart suggests impact investors start with these 144 NAICS codes using industry as a first filter, and then assess whether a given business meets the more subjective test for creativity, as well as expectations for sustainability, quality jobs and social impact. Read about some of the Creative Businesses Upstart Co-Lab is following here.
Outside of the scope of Upstart’s definition of Creative Businesses are:
- Purely commercial arts, design, entertainment, and media activities with no intended or identifiable social impact
- Asset-backed investment products built off artists’ repertoires, such as Bowie Bonds which are based on David Bowie album revenues
- Art funds invested in fine art objects, such as a paintings, photographs, sculptures