Editor’s note: Steve S. Rao is a Council Member and Former Mayor Pro Tem for the Town of Morrisville and served as a Board Member for the New American Economy, now the American Immigration Council. He also serves on the NC League of Municipalities Race and Equity Task Force. Steve is a regular contributor to WRAL TechWire.
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MORRISVILLE – On Juneteenth (National Freedom Day), we celebrated and rejoiced for freedom and equality for all Americans. Americans from all walks of life came together to ensure that all of us are provided the same opportunities regardless of our race and color of our skin.
Does equality in our nation necessarily mean that minorities will also be guaranteed the same outcomes as others? When it comes to minority owned firms, I am seeing that the opposite is the case.
Let me explain.
For the past two years, I have served on the Racial Equity Task Force for the North Carolina League of Municipalities, whose purpose is to empower local governments and cities to address racial inequities, identify systemic racial bias in our communities, and to enhance local leadership on race, equity and equity-related issues.
During one session last year, there was a discussion on the difference between equality and equity, two terms which I’d often implied meant the same thing. But that is not actually the case.
Equality v. equity
On a slide, there were two images, one labeled “Equality” and the other labeled “Equity.” Perhaps you’ve seen this same image.
The image representing equality was two individuals watching a baseball game, but one with a higher view than the other. The equality image was the same two persons watching the same game, but this time from the same view at the same level.
The presenter explained that equality means each individual or group of people is given the same access to resources or opportunities. Equity recognizes that each person has different circumstances and allocates the exact resources and opportunities needed to reach an equal outcome.
However, I am convinced that when it comes to supporting and growing minority businesses, we fall short of achieving equity and fairness.
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The COVID-19 pandemic
Covid-19 really brought to light some of the issues facing the Black business community and for me truly highlighted the difference between equality and equity. African American entrepreneurs have had to close their doors at more than twice the rate of their White counterparts. Black-owned businesses declined by 41% between February and April 2020, compared with a 17% decline among White-owned businesses.
In fact, an August 2020 study by the Federal Reserve Bank of New York found that 41 percent of Black businesses had folded amid the pandemic—the highest share among all racial and ethnic groups.
This year, a survey by a coalition of Federal Reserve Banks found that Black business owners were the most likely to draw from their personal funds to help keep their businesses afloat.
They also were five times more likely to not receive any of the PPP funding they had requested, compared with White-owned businesses. While 79 percent of White-owned firms received all of the PPP funding they sought, only 43 percent of Black-owned firms did, the report found.
A case study
A few weeks ago, I visited Melanated Wine, a wine store in Durham, which provides the ultimate wine tasting experience and sells and produces wonderful tasting wines. Melanated Wine was founded by Lashonda Modest, a Black woman, and very hard working entrepreneur. During my conversation with her, Lashonda revealed that her family had to take out money from their 401K plans, and invest their own personal money to kick start their company.
Lashonda’s story and others like hers confirm for that black owned firms, like hers, have continued to struggle during and after the pandemic. It is time to level the playing field.
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MAKING ASSISTANCE TO MINORITY BUSINESSES A HIGHER PRIORITY
The good news for firms like Melanated Wine and other Black entrepreneurs and small businesses is that the White House and SBA have made assistance to minority businesses a much higher priority.
Let’s not forget that at the June 1, 2021 centennial of the Tulsa Race Massacre, President Biden announced a bold new goal: increasing the share of contracts going to small disadvantaged businesses by 50 percent by 2025 – an unprecedented target projected to translate to an additional $100 billion to SDBs over 5 years.
This is a positive step to increase equity and level the playing field for underserved small business owners and we can only hope that we can see these contracts and dollars going to minority firms in the very near future.
The American Rescue Plan provided emergency grants, lending, and investment to hard-hit small businesses—including Black businesses—so they can rehire and retain workers and purchase the health and sanitation equipment they need to keep workers safe. This includes the new $10 billion State Small Business Credit Initiative, which will provide growth capital to early-stage companies and main street small businesses in economically disadvantaged areas, including minority-owned businesses.
Help through the SBA
In addition, the SBA is lucky to be the beneficiary of the strong leadership and vision of its new Southeast Regional Director, Allen Thomas, a good friend of mine and former Mayor of Greenville, NC. During a phone conversation with me last week, Allen passionately revealed how the SBA is working to significantly increase access to capital for minority businesses, and access to disaster recovery dollars.
The SBA also plans to double the number of minority firms in government contracting.
Allen made it very clear to me that one of his top priorities will continue the White House’s increase in investment to underserved businesses by providing a wide assortment of business start up and business expansion programs, provide more free training and resources for black and brown Americans, women, veterans and underserved Americans.
I am working to bring Director Thomas to the Triangle in the fall for a Town Hall meeting with our small business community.
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ACCELERATING BLACK ENTREPRENEURSHIP
At the end of the day, increasing the percentage of federal contracts and access to more Capital, loans may not be enough to small and disadvantaged businesses the boost they need.
If we look back at history, whether it was Hayti in Durham or even Greenwood in Tulsa, strong entrepreneurial support systems and ecosystems within the Black community led to thriving, successful companies.
At the end of the century, one of the founders of the Hayti community—James E. Shepard—joined John Merrick to form North Carolina Mutual Life Insurance Company. For much of the 20th century, the company was the largest or among the largest Black-owned companies in the nation. Black business owners would hire locals thus providing for a local economy that is Black owned and operated. Durham’s Parrish Street was known as “Black Wall Street,” due to the street’s role as a hub for Black-owned businesses.
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Durham, Tulsa
Prior to the massacre, the Greenwood District in Tulsa, with a population of 10,000 had thrived as the epicenter of African American business and culture, particularly on bustling Greenwood Avenue, commonly known as Black Wall Street.
Finally, The late Floyd McKissick Sr, a civil rights activist had led efforts in the early 70’s to launch Soul City, intended to be a thriving, mixed used destination, where small businesses could thrive and grow.
Now, we must to help strengthen entrepreneurial ecosystems for our minority business community, and fuel the same passion and energy which we have seen from Black entrepreneurs in the past.
How can we do this?
We need to establish new set of plays, a playbook, which can inspire the next generation of minority entrepreneurs in our region.
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PLAY NUMBER ONE: HISTORIC BLACK COLLEGES AND UNIVERSITIES AND ENTREPRENEURSHIP.
Last week, my wife and I dropped off our son at Winston Salem University for the North Carolina Governor’s School, a program for gifted high school seniors. We were amazed with how lovely the campus was and I was very surprised with how little I had heard of this university. We need to encourage more mentoring organizations like CED and TIE Carolinas to host events at HBCU’s like Winston Salem State, where we can connect young black students, to successful business executives, who can provide guidance and coaching and share their real world experiences.
Nothing can be more inspiring than to hear from those who have built companies.
I cannot think of a better place to make these connections happen than at the 11 HBCU’s in North Carolina.
The $3.7 billion investment last year in HBCUS through the American Rescue Plan and other pandemic relief is a start and we can only hope that more of these dollars can be invested in programs that provide more resources and support to minority businesses.
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PLAY NUMBER TWO: Diversity in Investor Groups and Funded Companies
While increasing access to capital to minority businesses is a critical piece of any growth strategy, we must also see more minorities serving as Limited Partners in Venture Funds, and Angel Funds. More minority representation at firms is important. I have heard Damon from Shark Tank often say that he can better understand the challenges minority entrepreneurs face as he has faced those same challenges himself.
More Investors like Damon, at our local investment firms can in my opinion, increase the likelihood of funding opportunities to minority businesses and entrepreneurs.
In addition, financially successful minorities can pull together angel funds, and can accelerate early stage capital to firms. For example, the global organization, TIE has a TIE Angel Fund, and many of these investors are Indian American. We need a TIE Angel Fund in North Carolina aggressively investing in all minorities and entrepreneurs of color.
Finally, I would encourage any black owned tech firms to check out Scot Wingo’s Tweener Fund, a rolling fund investing in Triangle Tweeners, high growth tech companies in the Triangle Start Up Ecosystem with $1 million in annual revenue. We certainly would encourage more diverse representation in future Tweener classes.
Congratulations to the newest Tweeners recognized last week at Lonerider Brewing in Raleigh.
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PLAY NUMBER THREE: Encourage STEM Careers for Jobs of the Future
A few years ago at the Raleigh CEO Forum, former Cisco CEO and Chairman, John Chambers stated that we could expect to automate away over 40% of the jobs we know of today, but that we had an opportunity to create 15 million new jobs. Chambers still predicts that many of these jobs will be around start ups in emerging areas of tech, AI, Data/Analytics, Cyber Security, Robotics Process Automation. And a recent study from the World Economic Forum warned that 85 million jobs are at risk by 2025.
The major obstacle facing these entrepreneurs is the extremely low percentage of black workers in the tech workforce. In 2014, Google published the first racial and gender breakdown of its workforce, showing that 1.9 percent of workers were Black. Today, just 4.4% of the workforce are Black.
Stimulating entrepreneurial careers in tech must be a high priority. Encouraging attendance to our community colleges would be a great way to increase the percentages of Black Americans in technology.
Existing examples
For example, Wake Tech RTP has an Early Career Stem High School, where a high school student, can get college credits in computer science, and have partnered with top Tech Employers in the area. Credit Suisse has made a $100,000 contribution to Wake Tech to support scholarships for underrepresented student populations in IT and other STEM programs, as well as ongoing technology and equipment enhancements at the RTP Campus.
We need to accelerate more of these public private partnerships with Community Colleges in NC. Similar types of partnerships with HBCU’s could also help advance Tech Careers for black entrepreneurs. NC IDEA announced $360,000 in grants through the Black Entrepreneurship Council and PNC recently announced it would invest $2 million into HBCUs for entrepreneurial programming. More state and federal dollars need to be invested in workforce training for these communities in emerging areas of technology. I would like to see the Wake Works Apprentice Program increase funding to HBCUs for this very purpose.
More training, more apprenticeships, can also lead to more successful entrepreneurial careers. Let’s also not forget that the $2 billion in federal funding through is dedicated specifically for HBCUs in the areas of STEM, computer science, and nursing.
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PLAY NUMBER 4: YOUTH ENTREPRENEURSHIP
Last month, I had the honor of attending the TYE Global Finals at UNC Kenan-Flagler Business School, global program run by TIE Carolinas which inspires youth entrepreneurship. During this program, high school students work with established entrepreneurs and mentors, to grow their ideas into viable companies.
Cloud Nine, the winner of the $1,500 prize, had a pitch as good as any I have seen from some of the best start up companies in the region.
Most of the participants of the TYE program are Indian American and Asian, so I would like to see TYE reach out to other schools in areas like Southeast Raleigh, and expand their reach to Towns in North Carolina with higher black minority populations, like Tarboro, or Washington. In addition, we should host more of these types of events and programs at HCBU’s and Community Colleges.
Finally, encouraging more youth to participate in programs like DECA can also help build the pipeline of entrepreneurial talent in North Carolina.
Learning how to work in teams and transforming ideas to a viable business, can give these young minorities a kick start to be the business leaders of tomorrow.
As we work to level the playing field for minority businesses, let us always remember that we are all supporting the same team, a thriving and vibrant business community in our region and state.
Now, the time has come for a new set of plays, which provide the resources, financing, training, and access to emerging careers in technology for minority business owners so that they can live up to their god given potential, regardless of their race, ethnic background or economic circumstances.
Lets put these four “plays” in motion, which will provide them not only the same opportunities, but guarantees the best outcome possible.
They must not only survive.
They must thrive.
Like the baseball slide at the NCLM Task Force presentation, lets make sure they are not only watching the same game but they have the same view as everyone else.
Looking forward to leveling the playing field for our Black owned businesses.
