ImpactAlpha, June 5 – A tweet about barriers to access to capital for entrepreneurs sparked an outpouring of ideas for removing them. The Kauffman Foundation’s Victor Huang shared a post about the foundation’s recent report on removing barriers to access to capital for entrepreneurs. Soody Tronson, of wearable nursing system startup Presque, nudged Huang for solutions.
“Victor, we know there’s an access problem,” she tweeted. “The issue isn’t more reports on the dismal state of affairs, it’s how do we get access and making it happen.” So Huang put the question to his followers: “What’s your biggest idea to help expand capital access for entrepreneurs?”
Entrepreneurs and investors weighed in.
1. Inclusive fund incubator. “Underwrite the development of new funds created by first time women and POC fund managers, and then capitalize them as anchor investors, loan guarantors and syndicators,” said Sphaera’s Astrid Scholz. “If every capital innovator I know had $100K, access to legal & technical expertise & their first $1M committed, we could mobilize billions. Think of it as an Inclusive Fund Incubator.”
2. Overcoming bias. “I would love to see capital embrace more of the blinding and rigor recommended for overcoming bias in hiring,” says Milk Run’s Rob Galanakis. He says diverse VC firms like Backstage Capital have no trouble finding and funding, but most companies are not at all diverse and need more than good intentions. Galanakis says we need more models like data-driven growth capital investor Clearbanc, where funding is objectively determined. He adds, “How short and to the point could you make diligence? How can we get to 2 weeks from intro to close, even on small amounts? The shorter and simpler, the less bias. Random disbursement on one end, current behavior on the other.”
3. Social capital. “In order to be able to get money they need broader access to the social capital networks where decision makers and influencers in the capital stack are,” said Pensole Academy’s Stephen Green.
4. Business networks. “Entrepreneurs also have to create new, 21st-century chambers of commerce like Biz for a Better PDX,” said Zebras Unite’s Mara Zepeda.
5. Kelsoism, suggested University of Colorado Boulder professor Nathan Schneider. A self-financing mechanism through community ownership.