Negash: Black-owned businesses are our economic future

 Negash: Black-owned businesses are our economic future

After the assassination of George Floyd and the marches, protests and civil unrest that followed, it became fashionable to support Black-owned businesses.

According to Bloomberg and Business Insider, Black Americans became the fastest growing group of U.S. entrepreneurs between February 2020 and August 2021, increasing 38%. This trend is particularly prominent in progressive communities like the Bay Area, which is full of diversity, but is also plagued by ongoing inequality.

But as media attention shifted to the next cultural crisis and the pandemic continued for more than two years, support for Black businesses disappeared, and promised capital slowly followed.

Founded in 2010, the African Diaspora Network (ADN) is a Silicon Valley-based nonprofit, led by immigrants that promotes racial equity and economic justice by building the leadership and economic capacities of immigrants in Africa and African Americans. Black leaders grow their businesses and networks through our business facilitation programs and conventions.

Simultaneously, we work with investors, academics and industry leaders to teach, train and facilitate investment in Black-led organizations and talent. Our goal is to break down systematic barriers for Black entrepreneurs to access capital and leadership positions while raising their voices to create lasting social change.

Africa is the next frontier of economic growth. The continent’s population will double over the next 25 years, and projections show that a quarter of the world’s people will be African by 2050. This seismic demographic shift creates a significant opportunity for investment. , innovation and entrepreneurship.

Africa is also a business continent. According to the 2017 African Economic Outlook Report, 22% of Africa’s working-age population is starting new businesses, the highest rate of any region in the world. Why? Many are starting businesses to take advantage of market opportunities, and 33% report that they are responding to the lack of employment opportunities in their communities. Each year, 29 million new entrants join the African labor force, and small and medium businesses are the biggest drivers of new jobs.

But not all businesses are treated equally. Trends show that African-based businesses led by non-Africans are more likely to receive funding. The Guardian reports eight of the top 10 Africa -based startups receiving the highest amount of venture capital are led by foreigners. In addition, systematic U.S. capital constraints mean that Black startups receive only 1% of venture capital funding on average, while Black nonprofits receive only 8% of the funding received by their peers.

The obvious factors at play here are the unconscious bias and pattern recognition on the part of investors. In addition, the differences between the cost of capital available to Black entrepreneurs through credit and other debt and their ability to access it explain why many Black entrepreneurs who may be in need of financing don’t even have to. choose to search for it. According to the National Bureau of Economic Research, Black businesses are less likely to have a formal relationship with a bank, and loan requests from Black entrepreneurs are three times less likely to be approved than white entrepreneurs.

As said, if you don’t have a seat at the table, you’re probably on the menu, and lack of representation is another major factor. A survey by The Information found that there were only seven Black decision makers in 102 of the largest investment firms in the United States in 2018. The threat that an unprecedented investment in the economy is not really reaching people who need it is very real.

Despite these shortcomings, BIPOC entrepreneurs have been able to create 4.7 million jobs in the last decade alone. Returns on investments in minority-owned businesses are higher than in white-owned businesses. The median net worth for Black business owners is 12 times higher than Black non-business owners. And if a black business owner succeeds, they will employ 10 other people on average.

These are numbers like those driving ADN to partner with Santa Clara University’s Leavey School of Business, the Silicon Valley Community Foundation, Santa Clara County and other partners to launch the Accelerating Black Leadership and Entrepreneurship (ABLE) program. , with a purpose. to promote the development of Black entrepreneurs and Black-owned businesses in the United States that promote a range of sustainable solutions to poverty in many sectors at the local and national levels.

The ABLE program was built from the success of ADN’s Builders of Africa’s Future Awards, a celebration of innovation and impact on African entrepreneurs running early stage non-business or for-profit businesses that are responding to the need. community needs through technology or different business models. The goal is to help scale their businesses and impact and attract attention to the opportunity that exists for meaningful and significant investment in BIPOC and immigrant-owned businesses.

Now in its fifth year, the Builders of Africa’s Future program awards 10 to 15 of Africa’s best entrepreneurs with business development training, collaboration and coaching opportunities, and a platform to develop their brand visibility and investment potential in Silicon Valley. Since 2018, the program has identified and catalyzed 42 startups in Africa, and DNA is now reviewing applications for the 2022 cycle.

The final group of 10-12 entrepreneurs will participate in a virtual pitch session during the annual African Diaspora Investment Symposium, to be held by Zoom on June 23. This showcase is the perfect opportunity for venture capitalists as well as angels. , impact and philanthropic investors to meet the key business leaders who are the future — and the present — of the business continent.

Everyone is welcome to register here.

Almaz Negash is the executive director of the African Diaspora Network.

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