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Ideas Made to Matter
For entrepreneurs of color, Boston lacks access and capital
Entrepreneurs of color in Boston face a forest of barriers to startup capital and opportunity, a situation advocates say is connected to systemic racism and discrimination in the business community, housing, and elsewhere.
On Oct. 22, MIT Sloan hosted “Building A More Inclusive Innovation Economy in Boston,” uniting three influential figures in the city’s diversity movement: Kerry Bowie, MBA ‘06, managing partner at Msaada Partners, which promotes entrepreneurship among communities of color; Segun Idowu, executive director of the Black Economic Council of Massachusetts; and a former Berkshire Bank executive vice president and current MIT Sloan lecturer who focuses on inclusion in the innovation economy.
The group offered data to support Boston’s reputation as an inhospitable place for minority entrepreneurs and offered solutions and hope, pointing to initiatives such as the Runway Project Boston, which provides loans to entrepreneurs of color, and the Black Mass. Coalition, newly launched to address economic inequity throughout the state.
Professor, associate dean for innovation and inclusion, moderated the forum with Professor, associate dean for diversity, equity, and inclusion.
Here are seven takeaways.
Minorities do not have access to capital due to systemic social constructs. Bowie noted that only about 3% to 4% of venture capital in the U.S. goes to women (some measures put it closer to 2%); only 1% goes to Black entrepreneurs. “Heaven forbid you’re at that intersection of being a woman of color,” he said. Further, minorities lack the networking opportunities traditionally available to white entrepreneurs, he said, where they can discuss ideas over golf or squash. “White people in this space are judged on potential, whereas for people of color it’s, ‘What have you done lately?’” he said.
Minority vendors receive a minuscule amount of city contracts. Idowu said that 0.6% of city contracts in Boston went to non-white-owned businesses in 2018.
“That meant that of $664 million, $4 million went to non-white businesses,” he said. That number has improved, but still lags far behind other U.S. cities.
Ultimately, though, city contracts should reflect city demographics, he said.
“Fifty-four percent of people who live here are people of color, and so I would love to see 54% of our business going to businesses of color … I would love to see that number matched in terms of where the money’s going,” he said.
Minority families lack household wealth, making it harder to build wealth in turn. “$8 is the average wealth of Black communities compared with $250,000 to the white community in Boston,” Lazu said, citing a 2015 report by the Federal Reserve Bank of Boston.
White wealth often comes from home equity.
“That house allows kids to go to college and maybe allows them a $20,000 loan to start a business. It gives you those choices to be able to build wealth, and that’s what [minorities] don’t have,” she said, noting that she started one venture, Accelerate Boston, with just $20,000.
“Getting these bridges doesn’t have to cost a lot of money,” Lazu said. In her time at Berkshire Bank she worked to improve things, but “It was really heartbreaking to see just the lack of access to capital,” she said.
Wealth begets wealth, Bowie said.
“If you’re sitting on $250,000 of wealth, it’s a lot easier for a mother or father or an aunt to write you a $25,000 check. To be an angel investor. To invest in you because they believe in you, and they’re not so worried about getting that money back. In our community, we don’t have that,” he said. “A lot of our companies just die on the vine because they don’t get to meet that first milestone or marker.”
Boston lacks important elements of a minority business community. “Those types of things don’t really exist here,” Lazu said.
Bowie has received complaints from minority entrepreneurs that there are few places that offer access to both community and capital for people of color. Free beer and shared workspaces aren’t going to cut it.
In response, he has spearheaded conferences and events, such as: Catalyzing Community and Capital, devoted to fostering community-building and funding, and Latina Techpreneurs, featuring local success stories such as Bloomer Tech, and Food for All.
“What we heard from those sessions was that entrepreneurs need technical assistance and consulting. They need help with that piece. At the time, pre-COVID, they needed spaces that were more inviting and accommodating,” he said, and which offer visibility.
“I would say our angel VC community in Boston is pound for pound ... as good or better than out in California. But until those people get on that radar map, money doesn’t flow. Nobody’s writing checks,” he said.
Racism in Massachusetts is subtle — so minorities need to be promoted to positions of true power to affect change. “What makes the racism in this city much more insidious is that, because we don’t have ‘whites only’ or ‘Blacks only’ signs, we think that we are morally superior to the South,” Idowu said. The day of the MIT Sloan panel, the head of the Boston School Committee resigned after appearing to mock the names of people speaking at a meeting.
The answer is to put minorities in positions of real power beyond diversity or equity slots, he said.
“[We need to] ensure that people of color, particularly Black people, particularly Latinx, particularly Indigenous, don’t just make up the diversity or equity positions … that they’re not just random board members, but that they sit on the executive committee, that they are the chair or vice chair of the board,” he said.
MIT — and other universities and nonprofits — needs to think locally. Lazu pointed out that the “M” in MIT stands for Massachusetts. “We have communities right here that could use the type of support that MIT gives globally,” she said.
Bowie agreed, reflecting on his own MIT experience, including G-Lab, an MIT Sloan Action Learning course that brings teams of MIT students to global emerging markets to conduct projects with startups and growing companies.
“At G-Lab, I went to Brazil and worked with a company. Why can’t I work with a company here in Roxbury or Dorchester or Brighton? Why did I have to fly halfway across the [world]?” he asked. “I think we need to have a focus and be intentional about what we’re doing to support people in our backyard, especially Black and brown entrepreneurs.”
A variety of similar labs at MIT Sloan today work with companies in Boston and Massachusetts, and more projects are exploring topics of racial disparity and inclusion. Two current examples: Students are working with Boston Medical Center on a project to reduce health disparities among communities of color and with Family Health Center of Worcester to optimize scheduling, an urgent need during the COVID-19 pandemic.
Diverse investing isn’t a form of philanthropy. “The misnomer is that this is charity work. This is not charity work. Investing in Black and brown founders is not charity,” Bowie said. “It isn’t a lack of talent. It’s just a lack of opportunity and resources.”