I enjoyed reading the New York Times article titled, "Matchmaking for Web Start-Ups and Investors," which featured Naval Ravikant, a 37-year-old tech entrepreneur and co-founder of Angellist. Ravikant started the service in February of 2009 with Babak Nivi. The site boasts more than 1,300 investors today. It also proclaims 398 investors have used the platform to fund 260 companies.
I couldn't find anything like it among sites targeting Black American entrepreneurs. I found that odd since Black America has suffered under enormous economic strife for generations. Since the days when Dr. Martin Luther King spoke of the "Urgency of Now!" the job problem has worsened in Black America.
Consistent Concern: Jobs
From that day to this, a thread of common neglect has remained: There has been relatively little Black capital invested in producing an innovation infrastructure that fosters high-growth entrepreneurship. In other words, we've complained bitterly about the harsh realities of suffering under conditions controlled by the majority demographic, but ignored opportunities to invest heavily in establishing a viable entrepreneurial ecosystem to generate new jobs.
Yet, across the vast desert of Black entrepreneurship, we discover an oasis of hope here and there, which in total stand in stark opposition to reports lauding the fast-paced growth of Black innovation:
"There is a silver lining in the dark cloud of the great recession. A new Census Bureau report reveals that from 2002 to 2007 the number of Black-owned businesses in the United States increased by 60.5 percent to 1.9 million - more than triple the national rate. According to Census Bureau Deputy Director, Thomas Mesenbourg, 'Black-owned businesses continued to be one of the fastest growing segments of our economy, showing rapid growth in both the number of businesses and total sales during this time period.'"
BlackVoiceNews.com echoed the same press release the following day.
TheRoot.com led the celebration on Feb. 16 with an article titled, "Good News About Black Progress."
"In starting new businesses and in academic achievement, African Americans have stepped up their efforts without any special help from a 'black agenda.' Let's start with two recent announcements. First, during the last decade, black businesses grew at three times the national average rate. That's major. More drily stated, black businesses increased by 60 percent, but the figure to keep in mind is the comparative one: three times as fast, plus."
CNN Money.com initially announced the Good News on Feb. 10, which kicked off the celebration.
Ironic Songs of Joy
But CNN's sweet song was off key. And that led to a cacophony of similar sounds that resonated with much of Black America, which sorely needed some good news in the face of a 16 percent unemployment rate, plummeting real estate values, mass foreclosures and depleted wealth that wiped out decades of hard-fought gains.
Please believe me when I say I love good news as much as anyone, perhaps more. With a baby due any week now, and playing principal roles in two startups, plus ancillary projects running simultaneously, I welcome any and all good news.
But I'm a realist who prefers truth to fantasy.
I would happily join in the chorus if the choir were singing the right song. But here are the lyrics drowned out by the joyous refrain:
The total gross receipts produced by 1.9 million Black-owned businesses amounted to $137.5 billion. That sounds like a lot until it's put into context.
The total productivity of all U.S. businesses, of which Black-owned businesses represent roughly 7 percent, was $14 trillion.
LESS THAN 1%
That means Black-owned businesses produced less than 1 percent of GDP.
That's a cold glass of water in the face. Here's a bucketful.
That pinnacle of super entrepreneurship growth was reached in 2007. And that fast-paced sprint over five years to eke out less than 1 percent of GDP was wiped out by the recession in subsequent years.
Here's what Carl Scramm, president and CEO of the Kauffman Foundation says the situation is today:
"Since it began, the recession has triggered annual declines in the rate of employer enterprise births. Far too many founders are choosing jobless entrepreneurship, preferring to remain self-employed or to avoid assuming the economic responsibility of hiring employees. This trend, if it continues, could have both short- and long-term impacts on economic growth and job creation.
"Entrepreneurship rates by race show that Latinos experienced the largest entrepreneurial activity increase between 2009 and 2010. The Latino business-creation rate rose from 0.46 percent in 2009 to 0.56 percent in 2010, the highest rate over the 15 years of Index data. The Asian entrepreneurial activity rate increased from 0.31 percent in 2009 to 0.37 percent in 2010, also the highest rate in the past decade and a half. Both African-Americans and non-Latino whites, on the other hand, experienced declines in entrepreneurial activity rates.
"The African-American entrepreneurial activity rate decreased from 0.27 percent in 2009 to 0.24 percent in 2010. The white entrepreneurial activity rate decreased from 0.33 percent to 0.31 percent."
Importance of High-Growth Entrepreneurship
Stunned? Here's what the U.S. Commerce Secretary had to say on Jan. 13, 2011, in the San Jose Mercury News: "Consider the fact that firms less than 5 years old accounted for nearly all new jobs in the private sector from 1980 to 2005. This is the power and promise of entrepreneurship."
Tim Kane of Ewing Marion Kauffman Foundation supports the premise: "In fact, net job growth occurs in the U.S. economy only through startup firms."
Context Around Black Business Growth
Ready for the big surprise? Here's more from the Commerce Secretary and Rep. Mike Honda in the San Jose Mercury News article:
"Asian Americans and Pacific Islanders have the highest rate of business ownership among all minorities, and their businesses account for fully half of all minority business employment in the United States.
"These facts should be of interest to all Americans because Asian American and Pacific Islander and other minority businesses make substantial contributions to the U.S. economy, generating up to $2.5 trillion in gross receipts and 16.1 million jobs.
"It's also worth noting that many of the 1.1 million Asian American and Pacific Islander-owned firms across America are small businesses, which have always been the primary engines of job growth in America."
OK. So what now?
Identify Problem -- Introduce Solution
The reality is Black America is, by most any measure, suffering an economic DEPRESSION. And the way out of any economic downturn is through high-growth entrepreneurship. Fortunately, there's a strong voice on the horizon articulating a clear vision that can lead Black America into substantive productivity and competitiveness.
BlackInnovation.org Introduces New Economic Narrative
Johnathan Holifield is the CEO of the Black Innovation and Competitiveness Initiative (BICI). The core principles of the nascent organization are: STEM education, Capital Investment Resources and High-Growth Entrepreneurship.
Holifield speak eloquently about the challenges of creating an awareness across Black America to what he calls, "The Innovation Economy."
Holifield compares today's Innovation Economy to previous visible economies, such as agriculture and manufacturing. Unlike those past visible symbols of wealth production, there's not a whole lot to see other than blue-jeans and T-shirt clad Gen Y churning out tech innovations so fast that by the time consumers have adjusted to a new item, it's old.
As I search for the missing Black angel investors that Black America desperately needs, Holifield reminds us the entire economy is not readily seen.
"Today, the Innovation Economy is not plainly visible. Regional innovation ecosystems comprised of critical elements such as research, commercialization and technology transfer activities and private equity investments -- in the forms of angel networks, seed funds and venture capital -- are not visible to anyone disconnected from it.
"There are no smokestacks and acid rain to see; there are seemingly quiet buildings that are generally (sometimes even artistically and architecturally) pleasing to the eyes; and the disconnected have no idea what goes on inside.
"The BICI's goal is to connect Black America to the Innovation Economy. However, before we can connect, it must be brought to light and made visible for us to see."
Black America: Plight and Opportunity
The plight of Black America over the past 47-plus years since Dr. King offered us his iconic "Dream" is indicative of a failure to invest in our own infrastructures.
Our children are failing in schools that Education Secretary Arne Duncan just informed Congress are trending toward an 82 percent failure rate this year. And while STEM (science, technology, engineering and math) fields are fueling the creative engine that propels the Innovation Economy, Black Americans are NOT the job creators in any appreciable percentages and may potentially face a very near future when we may not be qualified for many of the jobs being created!
What are we waiting for? President Obama to magically produce all of the jobs we need?
I propose we do something about the problem and accept President Obama's vision of innovation and competitiveness -- investing in our future through STEM education and capital investments in R&D and startup high-growth entrepreneurship ventures.
Let's move with a sense of urgency.
Let's invest in Black America.
Let's follow the path set by the Barbados Entrepreneurship Foundation, which proclaims it will be the "No. 1 Entrepreneurial Hub in the World by 2020!"
Let's get started today.
Call to Action
If you're as serious as I am, then let's join the BICI (BlackInnovation.org) in bringing together a gathering of Black angel investors right away to discuss the challenges ahead and establish a course of action. The BICI has already taken steps in the right direction. We will need to run to keep up with the pace.
Running is good. Time is short.
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