ImpactAlpha, Oct. 20 – Investors and advocates are increasing their focus on Black and Brown-owned businesses, which even before COVID struggled to access capital and since have been hit disproportionately hard. Solving capital access gaps for founders of color can accelerate job growth and help close racial wealth gaps while adding billions to the U.S. economy, per research from the Association for Enterprise Opportunity, Citigroup and others.
Small businesses, hit hardest by the shutdowns, have emerged as a leverage point for a robust recovery and inclusive post-COVID growth. “We are already doing dramatic things for the airlines and the biggest companies. We should be trying to do everything we can for the small businesses that can comprise the majority of employers,” former presidential candidate Andrew Yang told Victor Hwang of Right to Start, the economic justice campaign centered on small businesses.
The rejuvenation of small businesses is going to take dramatic measures, from elected officials to allocators of capital.
- $100 million for Black businesses. CapEQ’s Tynesia Boyea-Robinson launched Path to 15|55 to get capital and policy working for Black business owners. Now the collaborative has commitments of $100 million to reimagine how Black businesses are supported from family foundations, intermediaries and other philanthropic initiatives. “Business ownership and entrepreneurship are some of the best tools we have to grow the wealth of Black communities,” Boyea-Robinson writes in a follow-up post on ImpactAlpha. Read all about it.
- Three ways Congress can act. As Congress crafts the next round of stimulus, it should help states strengthen private financing of new businesses and expand access to capital across America, Allie Burns and Rustin Finkler of Village Capital write on ImpactAlpha. Among the proposals: Reclassify “small business” based on revenues rather than employees. Expand the definition of “accredited investor,” so more American can invest in new companies. And incentivize private capital investments in overlooked places. Sen. Amy Klobuchar’s New Business Preservation Act would allocate $2 billion in federal funds to allow states to match venture capital investments one-to-one. Keep reading, “Three acts of Congress that can revive entrepreneurship in America.
- Scaling capital for more entrepreneurs. “It starts at the top of the funnel,” Marla Blow of Mastercard Center for Inclusive Growth said in an Aspen Institute panel. Endowments and pension funds, she says, have an opportunity to change the incentive structure and return expectations of financial intermediaries to lower the cost of capital down the value chain for small businesses. Separately, a $1.67 million grant from the Kauffman Foundation to Living Cities will help stand up a vehicle for investments in fund managers of color to in turn invest in entrepreneurs of color. The funding will test “new ways to deliver capital to the Black and brown entrepreneurs who need it,” says Living Cities’ Demetric Duckett, a guest on Agents of Impact Call No. 22, “Rooting out racism as a systemic risk.”