Entrepreneurship | October 17, 2017

Investing to close the racial wealth gap

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By Dennis Price and Adrienne Day

The U.S. is forecast to become a majority-minority nation by about 2044.

Will the racial wealth gap be a chasm, or a relic of an earlier age? Wealth and other disparities along racial lines keep tens of millions from productively engaging in the economy.

Racial equity is a growth market

Living Cities, long-known as testbed for financial innovations to improve the lives of low-income Americans, hopes to make the wealth disparity a thing of the past.

With a shift in focus to racial equity, Living Cities aims “to highlight opportunities to enable families of color to build wealth,” Demetric Duckett of the firm’s capital innovation team told ImpactAlpha.

Why aren’t more people of color and women starting and growing more companies? One reason: “When people of color are younger, in school, they are told ‘Stay out of trouble, keep your head down,’” said Craig Vaughan, a managing partner at Vaughan Capital Advisors.

“They aren’t set up to take risks.” Monique Woodard, who invests in Black and Latino entrepreneurs at 500 Startups, said the business case for inclusivity is stronger than the charity case. “I talk about demographic change,” she said. “I make the market argument. I talk about movers and drivers.”