Capital. If you’re an entrepreneur, the equation is actually rather simple…not at all in the same league with E=mc2. If you have it, you’re in the game. If you have lots of it , you’re a bona fide player.
It may be the new millennium and yes everyone around you is hyped over technology and the vaunted New Economy. One look at the growth and diversity of black-owned businesses provides proof that there is more than a bit of truth behind the hype: black-owned technology companies are growing in size and number; Old Economy businesses are using new technology products and services to increase productivity and profitability; and a hyper-focus on product and service innovation is the order of the day.
But the old and new economies do have one thing in common: both require access to capital in order to compete and exploit opportunities in the global marketplace. In fact, the cost of technology and labor has increased black business’ demand for capital from both debt and equity sources. In real world economics 101, it still comes down to dollar bills.
The issue of capital-why others have it and why you (at least statistically speaking) don’t-was the subject of the most recent black enterprise Board of Economists meeting held in New York. Present at the meeting were be President and COO Earl G. Graves Jr.; Thomas D. Boston, an economics professor at the Georgia Institute of Technology in Atlanta; Andrew Brimmer, president of Washington D.C.-based Brimmer & Co.; Margaret Simms, vice president for research at the Joint Center for Political and Economic Studies in Washington, D.C.; Cecilia A. Conrad, associate professor of economics at Pomona College in Claremont, California; Gerald D. Jaynes, economics and African American studies professor at Yale University in New Haven, Connecticut; Darrell Williams, professor of economics at UCLA and a partner with Economic Analysis, a litigation-support consulting group, and William E. Spriggs, director of research for public policy for the National Urban League.
Also present at the discussion was Anita Cooke-Wells, the director of the Office of Capital Access at the U.S. Commerce Department’s Minority Business Development Agency (MBDA). Through its minority business development centers, the MBDA assists start-ups and existing businesses in obtaining financing for their firms. Cooke-Wells is directly responsible for developing and administering programs to increase access to debt and equity capital for minority businesses.
Cooke-Wells recently worked in conjunction with the Milken Institute, a private, nonprofit research organization studying American economic growth, to produce the report, “Mainstreaming Minority Business: Financing Domestic Emerging Markets.” Published in 1998, the report examines the capital access needs of minority-owned businesses and determined the following:
The market size of minority-owned business is approximately two million firms with total sales of $205 billion. From 1987 through 1992, the number of minority firms grew at double the rate of all U.S. firms, which was 4.7%. By comparison, black-owned firms are increasing at a rate of about 8%; with Hispanic firms at about 13% and Asian-owned firms at about 10%.
Add to the implications of the