Black founders in the U.S. received less than 2% of venture funding annually between 2015 and summer 2020, according to a report by Crunchbase; 13% of the U.S. population identifies as Black or African American.

Talent might be evenly distributed but opportunity is not. The fact that Black tech founders constitute less than 2% of those receiving venture funding should be viewed as a social problem to be solved. The problem cannot be attributed to racism alone or Black venture partners and Black venture funds would have different results than their white counterparts.

The Jewish community has a unique ecosystem that includes a long history of academic accomplishments in economics, smart businesspeople, venture partners and private foundations, which could participate in solving this problem. This problem should be viewed in the same way we want to reduce disparities in health care and education, or reform the criminal justice system.

Program-related investments (PRI) are a type of mission or social investment that foundations make in order to achieve their philanthropic goals. Like grants, PRIs are vehicles for making inexpensive capital available to organizations that are addressing social or environmental concerns.

Program-related investments could be used to solve this social problem and it could include making investments, without consideration of risk and return. If risk and/or return were not the primary driver of decisions, what different decisions would we make? In other words, if they were investing with “house money,” what different investments would be made?

Different investment criteria could be applied, such as, is this a sustainable business that could be around for the next decade or two? How many jobs do we see created, or jobs for people who are hard to employ, or jobs in economically depressed areas, or the business would bring a critical but missing service in a neighborhood, and there are hundreds, if not thousands, of such neighborhoods in the U.S. The real question is, “Is this a business we could help beyond the existing free or low-cost resources for entrepreneurs?”

The group would vet an initial pool of candidates and then ask, “What social resources could be applied to increase the probability of success, accelerate growth or increase return? Do they need introductions? Help building prototypes, finding a strategic partner, finding a first customer or a key member for the management team?”

Besides investors, the group would consist of former operators who are problem-solvers and have large networks, which could be used to solve these types of problems.

The point of the project would be to do this for several years and then evaluate not only the success, but what the common problems and solutions were so more systematic solutions could be applied as a way to address this social problem.

This concept is loosely based on a class taught at Harvard Business School by Jeff Bussgang called “Scaling Minority Businesses.” Scaling Minority Businesses (SMB) is a field course designed to leverage the intellectual power and community of Harvard Business School to address the vital needs of Black-owned enterprises as they face the twin tasks of surviving and growing. But instead of drawing on the resources of Harvard, it would draw on the resources of the Jewish community in the business and philanthropic areas.

The idea is to go beyond seeing those in the Jewish community who have had success in business as sources of capital, but problem-solvers. And if the problems these startups faced were solved, they would more easily get the capital they need.

This has similarities and differences with Environmental, Social and Governance (ESG) investing. What is being proposed here is a short, three-to-five-year experiment designed to find a solution to the problem of underinvestment in Black tech businesses, with the hope of producing policy recommendations. The investment in the individual businesses is a means to a much larger end, reducing the disparity in Black tech startups.

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