From SPECTRUM21: Leveraging Capital to Help BIPOC-Owned Businesses and Local Communities Grow
Financial leaders who are addressing the racial wealth gap are doing more than increasing capital to local BIPOC-owned businesses and their surrounding communities — they are encouraging entrepreneurs to grow while overcoming systemic social barriers and helping to expand the national economy.
As George E. Ashton III, Managing Director, Strategic Investments, Local Initiatives Support Corporation (LISC), said during the SPECTRUM21: Color of Money lightning bolt session, “Leveraging Private Capital to Create Resilient BIPOC Businesses,” bridging this financial gap “means a lot of great things for the entire country — increases in GDP, millions of jobs, increases in revenue for the black businesses and communities.”
At LISC, a national organization with 37 local offices around the country, Ashton and others are working to reshape the financial ecosystem by directing more capital to BIPOC-owned businesses looking to grow — and help their communities in the process. During the SPECTRUM21 session, Ashton noted that while the number of minority-owned small and medium businesses increased 79% from 2007 to 2017, the racial wealth gap continued to widen due to a lack of capital going to these companies.
“We see that the number of jobs they create, the revenue of the business, and how often the businesses shutter are all signs that these businesses are not being nurtured and growing in a scalable way to provide income and important opportunities to their communities,” he said.
With a goal to help BIPOC-owned small and medium businesses grow, LISC hopes to use growth capital to increase resiliency and opportunity. That means identifying businesses primed for growth and helping them build their revenue and customer base by diversifying into multiple business lines and entering industries with higher barriers to entry, he said.
Ashton said LISC’s growth capital product provides patient financing, technical assistance, and investor validation to help entrepreneurs who have been in business for a few years scale up for opportunity. The growth investments, ranging from $25,000 to $250,000, originate as recoverable grants that are restructured, he said.
By boosting small businesses and partnering with local technical assistance networks, LISC hopes to build community and help address a national social challenge.
“It’s critical to changing the makeup of our country and fixing the problems in our country,” Ashton said. “For me it’s not about whether we know what to do, it’s if we have the courage to do it.”
Watch Leveraging Private Capital to Create Resilient BIPOC Businesses
George E. Ashton III, Managing Director, Strategic Investments, Local Initiatives Support Corporation