How to Fix Capitalism: Start by Seeing Black Businesses as the Investment Opportunity They Are
Many white Americans have been shocked by the public displays of police brutality against the peaceful protests following the death of George Floyd. Similarly, the disproportionate impact of the coronavirus on Black and brown communities has crystalized for many the reality that systemic racism still exists in the U.S. It leaves many searching for something tangible they can do.
The past few months have also forced many to reckon with something I’ve talked about for years—the fact that capitalism is broken. But despite the grave challenges we face within our capitalist system, I know that we can fix it. I began CapEQ™ to help people find solutions to these sorts of persistent problems. CapEQ™ is an impact investment and advisory firm that works with nonprofit, government and business leaders to change the way the world does business. We help companies develop new revenue streams, and work with government entities to create large-scale system changes. Central to what we do is to help people do well BY doing good. I like to say, “Impact can’t be the side dish. It has to be the main course.”
Black Businesses: A $55 Billion Opportunity
Right now, to boost the recovery efforts from COVID-19 and address the civil unrest in Black communities, people are looking to support and invest in Black businesses. These efforts represent a huge opportunity to do well by doing good. According to Association for Enterprise Opportunity research, investments in Black businesses could lead to an additional $55 billion for the U.S. economy. That is a big main course.
Yet the historical and continued lack of investment in Black businesses is one of the clearest examples of how our capitalist economy is so broken. Black entrepreneurs like myself and so many others are often overlooked for support and investment simply because we do not conform to the traditional “picture” of what a successful entrepreneur looks like. Fixing capitalism will require our society to see Black businesses as the investment opportunity that we are.
To move away from this chronic undervaluing of Black businesses, we as a society need to make two major mindset shifts to support the investment and growth of these businesses and reach that $55 billion opportunity.
Operate Within a Mindset of Abundance
Black businesses (and Black communities in general) are always looked at through a deficit mindset. This is a result of the systemic racism in our country, based on the idea that people only need to “pull themselves up by their bootstraps” to succeed and that we are divided up into a country of “makers and takers.” Redlining – the practice of segmenting neighborhoods based on demographic characteristics and then denying capital investment based on those demographics – among other policies, systematically prevented wealth from accumulating in Black communities, and resulted in underinvestment in those communities for years. Therefore, Black-owned firms earn lower levels of revenue than similar white-owned firms, and businesses like hair salons, which have disproportionately high ownership by Black entrepreneurs, are often overlooked for growth potential.
Yet if you switch your mindset and see the abundance in these communities, the opportunities are everywhere. Impact America Fund is an investment firm focused on businesses that support low- and moderate- income communities, which are disproportionately Black and brown, because “traditional investors chronically undervalue or overlook business opportunities in [these] communities.” They’ve invested in companies like Mayvenn, which see the potential in the local hair salon. Mayvenn is an online platform that helps people of color keep the dollars they spend on beauty products in their communities by connecting consumers directly to local stylists. It has reinvested millions back into neighborhood salons and is currently valued at $100 million.
Recognize the System of Support Around Successful Entrepreneurs
We all know the story — the exceptional founder starting a company in his (it’s almost always a “he’’) basement, working at it for years, and turning that company into a multi-billion dollar enterprise. But we also know this (white) founder has benefited from a massive network of support built up around him — from his friends and family, to institutions like local Chambers of Commerce that are primarily white-led and typically serve the interests of white entrepreneurs.
We need the same systems to support Black entrepreneurs. The New Orleans Business Alliance, for example, has explicitly focused on Black business owners and Black employees in their economic development work, building a community around them. They brought together government and business leaders from the region to align policies and practices to support Black communities. Thanks in part to their work, New Orleans recently saw a 15% reduction in Black male unemployment, while also exceeding the city’s targets for investing in disadvantaged businesses.
These mindset shifts may seem daunting at a local level, and almost impossible to achieve at a national scale. But they are possible if we begin to work in collaboration – which is precisely what we are doing.
in mid-June CapEQ™, along with our partners the Surdna Foundation, the W.K. Kellogg Foundation and the Brookings Institution, publicly announced Path to 15|55, a collaborative initiative working with experts from every sector to deploy strategies that will address systemic barriers and accelerate Black-owned business growth and employment. The “15|55” name comes from the $55 billion opportunity mentioned earlier: The Association for Enterprise Opportunity found that if 15% of Black-owned nonemployer firms had employment parity with all firms, they would create 600,000 new jobs and add $55 billion to the U.S. economy. This clearly cannot be achieved by one organization alone, but needs to be done in partnership with a collaborative mindset.
If you are ready to make these mindset shifts and help fix our capitalist system, join us by visiting www.Pathto1555.org and signing up to become one of our partners.
Photo courtesy of Christina @ wocintechchat.com.