Today, in a twist, New Jersey Governor Phil Murphy Has announced a proposal to allocate $ 10 million in the state budget to create a seed fund for Black and LatinX startups, ClearTips exclusively learned. The Black and LatinX Seed Fund will be administered by the New Economic Development Authority (NJEDA).
Based on research done by the state, NJEDA CEO Tim Sullivan stated that New Jersey is the first state in the country to develop this type of fund.
He said that this step is a direct answer Systemic racial disparities in access to capital for black and brown entrepreneurs “and aimed at addressing the racial wealth gap.”
Sullivan said, “I think the government’s two central governments. Murphy’s strategy for the economy is to build a strong and fair New Jersey and a strong and fair economy.” It also focused on “reclaiming the New Jersey heritage of leadership, innovation and entrepreneurship.”
It is a known fact that the number of venture dollars flowing to the Black and Latex founders is almost small.
As a proof, last year Crunchbase It was found that as of August 31, the founders of Black and Latex had raised $ 2.3 billion, a mere 2.6% of the total $ 87.3 billion in funding that went to all founders by that point in 2020.
Also, Digitalundivided’s ProjectDiane 2020 report found that Black and LatinX women founders received just $ 1.7 billion in investment dollars totaling $ 276.7 billion between 2018 and 2019.
In the last several months – in the wake of the assassination of George Floyd and the Black Lives Matter movement – we have seen an increase in venture funds Announce the initiative Towards funding a broad group of founders.
“Previously there was a Silicon Valley, whether you’re talking about people like Thomas Edison, Bell Labs or Cernoff Labs, we were the place that probably fostered 20th-century American entrepreneurial-led growth from anywhere else. Give, ”Sullivan told ClearTips. “And the reality is that we’ve lost quite a bit of that. We are still one of the top places for innovation and entrepreneurship, but in other places — whether it is out west or in places like Austin and Boston — we have really given up on our game and we are in that undisputed leadership in innovation, entrepreneurship. Want to regain the status of. “
In addition – under the government’s Murphy leadership – the state wants “the most diverse and inclusive innovation ecosystem in America to be built.”
“It is very simple, especially said to be due not only to centuries of systemic discrimination and racism, but to some very specific manifestations of that systemic disintegration and discrimination, particularly of venture capital funds and early stage funding.” Around “, who once worked Barclays Capital as head of global investment banking.
Gov. Murphy’s chief policy adviser, Zakia Smith Ellis, said the initiative came after negotiations with Black and LatinX’s business investors.
“TIt was developed by them with input from people who could be direct beneficiaries of the program and this community was directly effective in designing and developing the proposal, ”Smith Ellis told ClearTips. “We hear from them ‘We don’t have family members, we don’t have friends who are just going to write me a check in the beginning, I think it’s really educative.’ “
The legislature is scheduled to vote on the motion until 1 July.
While it was difficult to find examples of governments doing similar things, there are many organizations committed to financing the various founders.
In February, several national and Chicago-based organizations banded together to support early-stage Black and LatinX tech entrepreneurs through a new program dubbed Techies. The nonprofit P33 launched the program in partnership with Verizon and 1871, a private business incubator and technology hub, with the goal “reducing the funding gap in Chicago, creating thousands of tech-related jobs and $ 5 million in grant funds” Had to give. ” According to the Chicago Sun Times, for Black and Latino entrepreneurs. ()Disclosure: Verizon is the parent company of ClearTips) Belongs to.
And, Detroit-based ID Ventures says it invests in minority and women-led companies “at 4x the national average.”
The organization’s website states, “By providing opportunities to fewer entrepreneurs, we can ensure representation, respect the diversity of our state and create a startup community unlike any other.”
Also in Austin, DivInc is a non-profit pre-accelerator that holds 12-week programs for under-practiced technology founders. Founded in 2016 by former Dell executive Preston James, the organization aims to “eMPover of color and women entrepreneurs and help them succeed By providing access to education, consulting and critical networks to high-growth businesses. “