“More than 100 years ago, we asked the right questions and developed the right narrative and strategies to progress in the industrial economy. In the 21st century, we have not,” said Holifield – an attorney, former NFL player and a fellow co-founder of the Black Innovation and Competitiveness Initiative (BICI).
“Rethinking our economic narrative and evolving our prosperity strategies to reflect today’s opportunities,” he continued, “is our principal challenge.”
Business incubators and accelerators are necessary components of a vital entrepreneurial ecosystem that drives job creation and wealth in this country. That ecosystem requires capital to fuel job growth. Black American and urban centers have historically been disconnected from that ecosystem. And, with millions of Black Americans sitting on the sidelines, we don’t need to look much further than ourselves for leadership in changing the equation and brightening the economic future for those who seek to compete in the new innovation economy.
The Kauffman Foundation reports that all net, new jobs in America since 1980 were produced by companies five-years old and younger — the result of economic fuel-injection from equity-risk capital angel investors and venture capital. Meanwhile, Black America and large swaths of urban America experience just the opposite — no job growth. The Census counted 1.9 million Black-owned businesses in 2007, which produced $137.5 billion in revenue. That’s less than 1 percent of GDP. Nearly 1.8 million of those businesses are sole proprietors with no employees.
But that was before the economic collapse.
Today, Black unemployment is 16 percent — twice the unemployment rate of Whites. The depth of the problem is underscored by the Bureau of Labor Statistics’ (BLS) broader measure of unemployment data, referred to as U-6 data. This includes, “the unemployed, as well as people who would like to work but have not looked for a job recently, and those involuntarily working part-time.” For Black Americans ages 18-29 with only a high school diploma, the U-6 unemployment rate is slightly over 29 percent, according to a Sept. 2011 data report compiled by the Center for Immigration Studies. An even more troubling fact is the depth of the unemployment problem in Black America has been a constant reality since 1963, when Dr. Martin Luther King, Jr. spoke about the issue of unemployment to thousands on The National Mall. Moreover, in the aftermath of the Great Recession, the wealth gap has widened, with White median wealth now 20 times greater than that of Blacks.
That’s the backdrop for the heated debate over the scarcity of Blacks in technology sectors, particularly in Silicon Valley — the Mecca of start-up innovations and venture capital.
“It’s true that few Black tech entrepreneurs exist,” says Chad Womack, a biotech entrepreneur, STEM education advocate and fellow co-founder of the BICI. “And there would be more if we could connect a robust pipeline of tech-entrepreneurial talent to capital and the innovation ecosystem.”
Another pressing and oft-ignored problem is there are far fewer Blacks in the space of angel investing. Nearly 900 venture capital groups manage institutional funds in which Blacks have money invested via pensions and other funding options. These funds are used as economic fuel to generate significant job growth among fast-growing, young companies. The top 1 percent of these companies account for 40 percent of job growth in the nation every year. From founders to fund managers, there are few Blacks in that ecosystem, even as they contribute to its success.
The Angel Capital Association, which has nearly 200 member groups representing more than 10,000 individual angels nationwide, counts only one Black angel group among its members.
It is vital that the innovative talent in all sectors of our society receive significant investment and access to opportunity in order to strengthen the nation’s overall economic competitiveness. The problem Black entrepreneurs face today isn’t solely one of neglect by the nation’s corporate infrastructure, including financial institutions. The equity-risk capital ecosystem in Silicon Valley and other regions of the nation are lacking (to any appreciable degree) Black, high-net worth individuals — angels and institutional investors — who are willing to conduct due diligence on start-ups and invest their money to support innovations that can produce both jobs and wealth.
The dismal economic data that defines the past and present for Black America should not define the future. We must focus our attention on the problem, not individual people, and develop solutions that include our full productive participation in the 21st century innovation economy. While elected leaders play a role in the overall economic landscape, we don’t need government to lead us and we cannot and should not wait on Superman to save us.
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