One of my favorite cycling studios in New York City announced they have been forced to close. It has a great founder story and the concept worked so well, it had a thriving following that built community. The note about the closing stated they had applied for bankruptcy. However, the courts decided they were not financially viable to remain open, so they were forced into liquidation. More heartbreak this week.
While the tech sector thrives, small businesses are dying by the thousands. Just as the pandemic has shed light on the inequities in access to healthcare, employment, broadband and vaccine distribution, we continue to experience the same dynamic play out in local economies. High uncertainty remains, the amount of financial relief available has been unevenly distributed, and many owners fear taking on debt. Business owners are beginning to shed optimism. Noting an 8-month low in confidence levels, we now seem to be chasing our tails, while we chase paper.
Yesterday, I alluded to the notion that many entrepreneurs get caught up in a cycle of working on their business and chasing paper — I mean, pursuing investment to scale their business rapidly. Here’s the hard truth: between 1 - 3% of all venture capital funding goes to startups with Black and Brown founders. One report I came across reported that out of $12.5B in investments made last year, just 2.5% went to Black-led companies. It’s important to keep talking about this systemic problem. The inequity that exists, and the barriers that persist, in access to financial capital threatens the lives of too many small businesses and the future of entrepreneurship.
Barriers are beginning to lower across sectors, giving us some encouragement. We are seeing more unrestricted grants, an emphasis on capacity building and multi-year grant commitments for nonprofits. The private sector is stepping up with more targeted investments. JUST Capital has a corporate tracker that’s worth referencing to see the many ways companies are supporting their workers and investing in communities since COVID. I also found that AdAge has a corporate tracker dedicated to brand commitments to racial equity, which was behind a paywall, until I sent the tweet shown below:
👏🏽 👏🏽 👏🏽 (give it up for transparency!) #WinForTheWeek
There’s more reason to be optimistic as our nation’s leaders strike conversations about public-private partnerships to help close the gap. The latest good news comes from the Biden Plan to close the racial equity gap in this country. What’s remarkable about this initiative is not only the $50 billion earmarked to fund entrepreneurs, but also the way in which the plan emphasizes the entire ecosystem including quality jobs, looking to stymy disparate unemployment, and allocating $30B in low-interest loans for small businesses. Public policy and direct investment matter so much right now. It feels so urgent, yet we know how long it has taken to propose economic justice, in this way, for Black and Brown communities.
While we wait for government and companies to do more that’s required, we can continue to support Black-owned businesses especially. I’m an advisor to Pacific Community Ventures, a community development financial institution (or CDFI) based in San Francisco. They primarily lend to businesses in California, but they help bring expertise to small businesses across the country through a business advising platform they built. They match professionals with owners, and the commitment is less than 5 hours per month. Today, I am closing this post by sharing a few of their resources to spark a movement for more local, economic spending across the country.
If you are a small business owner, join us over in the PCV Small Business Support group on Facebook for technical assistance and general support from a growing community. Here’s an open-source document where everyone can explore where to shop with our hundreds of Black-owned small business clients across the country. Finally, consider becoming a mentor to a small business today. Here are just two Black and women-owned retail businesses in the network to support:
Bringing expertise to a small business can be as impactful, if not more, than capital to the long-term success of the business. Adopting a local business might just keep them from closing. Of course, spending intentionally will also help keep them from even having to chase after all that paper.
Onward, my People.