Minority communities are home to a lot of talent, but need connections to opportunities.
When it comes to boosting minority entrepreneurship, business growth and hiring, our nation has been using more or less the same strategies for well over a quarter century – with essentially the same results. African Americans and Latinos comprise over 30% of the American population today, and will become the American majority in the next 25 years. African American and Latino owned businesses, however, generate less than 4% of U.S. GDP. Meanwhile, the range of approaches to minority business development, which includes special certification processes, connections to private and government procurement opportunities, capital access strategies and the like, is evolving too slowly.
We have enough of a track record to know that current approaches, while groundbreaking and appropriate in times past, will not generate the scale or pace of progress that we need as we head into a majority-minority future. Nor will they help minority entrepreneurs and businesses keep pace with the blistering technological, environmental and other changes taking place today. And since minority-owned and -led businesses are proven by research to hire more minorities, the long-term economic implications of this challenge are profound.
“Current approaches… will not generate the scale or pace of progress that we need as we head into a majority-minority future.”
We don’t have all the answers as to how exactly to “reinvent” the minority business assistance landscape, but we know more than we might think.
Minority communities are home to a lot of talent, but need connections to opportunities
We know from our work at MainStreet Inclusion Advisors, a firm connecting underserved populations to high-growth and innovation-based business opportunities, that there are tens of thousands of talented, highly skilled people of color in communities across the country. These entrepreneurs, however, are disconnected from opportunities to grow their own, or get on board with, high-growth potential businesses. This is particularly the case with technology and innovation-based businesses where there are two parallel – separate and unequal – business development ecosystems, one “mainstream” and one specialized for minorities, which seldom interact. As a result, well-educated, highly skilled people of color continue to be disconnected from the business incubators, accelerators, and “deal flow” activity that are producing some of our nation’s most promising businesses.
We can better integrate our networks
The infrastructure of today’s minority business and professional networks evolved out of our country’s darker days of segregation. While there are still benefits to having specialized business development networks, we no longer need to confine ourselves to the operating logic of those times.
Our experience at MainStreet shows that there are ways to link minority talent and business networks with the “mainstream” business development system. And, while the work is hard, the framework can be relatively simple. When mainstream economic development groups come to us to help connect them to minority talent and business networks, their needs generally fall into three categories:
- Deal Flow: Identifying and developing more high potential minority-owned firms for consideration by investors tied to mainstream networks;
- Capital: Identifying private investors and diverse sources of funding to support businesses with high growth potential;
- Talent: Connecting talented people of color to the management, board, advisory and other leadership opportunities in these emerging high growth enterprises.
The key in this framework is to facilitate meaningful connections around specific and actionable transactions. Rather than perpetuating parallel systems, we are working toward a singular, more inclusive system that connects the best and brightest talent and entrepreneurs from all populations. For example, we’ve created a web-based Talent Portal that facilitates the sharing of information and business opportunities between mainstream and minority networks. We also provide “readiness training” to help prepare minority entrepreneurs for equity capital, exporting, and related opportunities. More solutions towards this end are needed.
“We are working toward a singular, more inclusive system that connects the best and brightest talent and entrepreneurs from all populations.”
If we want to connect more minorities to better jobs, we have to do a better job of growing larger scale minority-owned and minority-led businesses. This requires market-driven, integrated solutions, not a separate-and-unequal approach. Our approach isn’t the only solution, but we believe it points in the right direction. In today’s multi-cultural America, it’s only through further integration of the best and brightest talent from all ethnically diverse networks that we can truly optimize business growth and expansion for all Americans.