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, Oklahoma; 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.
Here are a few 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 (businesses) 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,” Bradley said.
Successful entrepreneurial ecosystems need a combination of opportunity, support, knowledge and capital; however, capital 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.*
“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,” Case said.
The panelists 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,” Holt said.
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 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 cyberattack. Forty percent of new small businesses have been cyber-attacked. …You can start to see that there is a disconnect,” Singh said.
For further insights, watch the panel from the Clinton Global Initiative 2022 meeting.
The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation based in Kansas City, Missouri, that seeks to build inclusive prosperity through a prepared workforce and entrepreneur-focused economic development. The foundation uses its $3 billion in assets to change conditions, address root causes and break down systemic barriers.
* According to Kauffman Foundation