The Clinton Global Initiative cited a Global Entrepreneurship Model survey that found women-owned businesses were 20% more likely to report a closure due to the pandemic, while a report from the Federal Reserve Bank of New York stated that in 2020 Black-owned businesses were almost twice as likely to close. Yet, while underrepresented entrepreneurs face systemic barriers and limited access to resources to sustain their businesses, many see them driving the acceleration of new business creation in the U.S.
Recently, Kauffman Foundation Vice President of Entrepreneurship Philip Gaskin moderated a panel of experts at the Clinton Global Initiative 2022 meeting in New York. The panel featured Melissa Bradley, founder of 1863 Ventures; Steve Case, chairman and CEO of Revolution; David Holt, mayor of Oklahoma City; and Shamina Singh, executive vice president of corporate sustainability at Mastercard, and president and founder of the Mastercard Center for Inclusive Growth.
The conversation explored what concrete actions are needed to provide equitable access to support, knowledge, opportunity, and capital for entrepreneurs in underserved communities, as well as why there is both a moral and economic imperative to do so.
Watch the panel or read highlights from the conversation:
“If you do not allow everyone to equally participate, there is a real opportunity cost to the entire country, if not to the world. […] Over the 20-year slump of entrepreneurship we’ve had in this country, the majority of entrepreneurs – the 4.3 million post COVID that were started – were mostly women and Black women. It just seems asinine to me that the money is not being invested in the fastest-growing segments, where we are not only seeing people cultivating wealth, but solving real social problems.”
Melissa Bradley
Founder, 1863 Ventures
Successful entrepreneurial ecosystems need a combination of opportunity, support, knowledge and capital; however, it is not equitably distributed across the country. For example, three quarters of venture capital goes to just three states – California, New York, and Massachusetts. Moreover, at least 83% of entrepreneurs don’t access traditional bank loans or venture capital when starting their businesses. New, more inclusive approaches to investing can help support entrepreneurs who aren’t effectively served by traditional capital markets in order to level the playing field for under-resourced regions and communities and, according to Case, support job creation.
“Small business is important, and big business is important, but new business is more important. Companies under five years old – that’s where most of the jobs are coming from. And while not every company starting out wants or needs to raise venture capital, the data does show that the ones creating the most jobs and the most economic growth do tend to raise venture capital. […] We’re proving that you can invest in places that most venture capitalists aren’t paying attention to and generate great returns, and in the process also give those communities a little more of a sense of hope and possibility.”
Steve Case
Chairman and CEO, Revolution
The panel agreed that access to capital should not only expand geographically but equitably to address disparities in communities that are historically and systemically underserved. Local leaders and governments can play a critical role by championing small businesses and entrepreneurs in these communities.
“In America we don’t promise equal outcomes, but we do promise equal opportunity. […] Economic opportunities are not equal across our city, and you can see it with your own eyes when you drive down certain streets. So, you need to have those programs that are blind to geography, but you also have to focus on making sure you’re getting development into those areas. We’ve had some really exciting developments along Northeast 23rd Street, which is the heart of our historically Black community in Oklahoma City. It might be small-time stuff in the grand scheme of things, but to have a grocery store, a coffee shop, a hotel going into places where there’s been no development for 40 years – it gives hope.”
David Holt
Mayor, Oklahoma City
Small business owners, no matter where they live, need equitable access to resources to start, grow, and sustain their businesses. Singh addressed the “digital divide,” which presents unique challenges not only because of geographic infrastructure limitations, but also due to limitations in knowledge and capacity.
“Unless you’re an entrepreneur who’s really interested in doing something digital, you want to just do your work. The digital piece, whether it’s around payments or inventory or HR, is something that’s sort of considered back-of-house. […] If you ask a small business owner how they rank cybersecurity in their priorities, it’s usually about No. 5. But 60% of small businesses close within the first six months once they’re hit by a cyber-attack. Forty percent of new small businesses have been cyber-attacked. […] You can start to see that there is a disconnect.”
Shamina Singh
Executive Vice President of Corporate Sustainability at Mastercard, and President and Founder of the Mastercard Center for Inclusive Growth
Inclusive, collaborative entrepreneurial ecosystems can help bridge these long-standing gaps and dismantle the barriers, Gaskin says. “No matter where you are in the world, these types of barriers to access – opportunity, funding, knowledge, and support – get in the way of too many people starting businesses and spurring economic growth.”