Innovation Crisis in Black America, Pt. 1

There is a crisis occurring in 12.3% of the American population, otherwise known as Black America.

The crumbling economic infrastructure of the nation has impacted every industry, media included. As a former journalist who voluntarily resigned a position as Web editor of an award-winning daily newspaper (owned by Dow Jones Local Media Group and News Corporation) to pursue my own Internet startup, I am considered among many pioneers who are voluntarily or involuntarily transitioning from long-held careers to entrepreneurship and creative opportunities made available by the Digital Age.

Online Opportunity

The Internet has become the tool of choice for hundreds of millions to communicate and conduct e-commerce. It also serves as a low-cost, low-risk entry to entrepreneurship with extraordinarily high returns on investment. Consider some of the big winners:

  • 7 years ago Skype was created: Bought by eBay two years later for2.6 billion.
  • 6 years ago Facebook was created: Today it boasts more than 500 million users and owns 25% of the social ad marketing revenue worldwide.
  • 5 years ago Youtube burst onto the scene: Google (still a growing kid at the time) bought it for more than $1 billion.
  • 3 years ago Twitter created a paradigm shift in communications: Received $22 million in funding in 2008 and $35 million in 2009. It still hasn't settled on a specific revenue model but continues to grow in reach and influence.

Creatively Targeting Consumers

In the same time frame that innovations like Google (13-years-old) have been introduced, wealth in Black America has grown. Much of it, however, is focused on spending as consumers. Ken Smikle, president of Target Market News and editor of the "Buying Power" report said:

"In 2008 black consumers had total earned income of $803 billion. They ranked 17th among the economies of the world in comparable gross national income. They continue to be a critical part of the American marketplace, and will contribute substantially in the economic recovery of American business."

Entrepreneurship, creativity and innovation are hallmarks of the process that revitalizes economies. The big winners are innovators who succeed in creating new ideas, developing innovations to established concepts and bringing new products and services to market. Consumers are the fuel that run the engines of innovation. Finding ways to attract those consumers is the focus of a relatively new Internet industry that produces tools for entrepreneurs.

Speed of Innovation

In the past two years, the pace of Internet innovation has ramped, and the speed of creative applications and consumer services referred to as "apps" is dizzying.

Within the media industry itself, we've witnessed rapid success of Internet innovators, like the Huffington Post, Daily Beast, Politico and others who capitalize upon the slothful pace of major media institutions. Even blogs, like Daily Kos, Gawker, Mashable, Read, Write, Web and others have become enormously popular ... and lucrative.

Where Are Black Innovators?

Conspicuously absent from most any list of popular and financially successful technology based and Internet-based innovations are Black-owned companies and individuals.

Although Internet innovation is occurring in Black America, and popular online destinations, like Black Planet and TV One have successful business models, the 2010 Black Weblog Awards is indicative of the primary entertainment focus of Black-owned ventures online.

There is an ongoing conversation about the state of innovation in America, such as the one Ben Casnocha, the author of "My Start Up Life," features on his blog: whether the pace of innovation is slowing or speeding up. Such conversations and debates need to be included in discussions about entrepreneurship held across Black America.

Technology Based Innovation

The fundamental development of Internet applications and Software As A Service (SAAS) represent the aggressive engine that offers tools of the Internet trade while video game technology online pushes the boundaries of Internet space, speed and user experience.

In the arenas where startup Internet companies are created and sold for multiple millions of dollars within a very short span of time, Black entrepreneurs and innovators are lagging behind. It can be argued Black Americans are not sitting at the back of the speed-possessed innovation bus -- we're still standing at the bus stop after it has raced by.

Educating Entrepreneurs

Universities across America are following the examples of Stanford, Harvard and a growing number of universities in teaching entrepreneurship as a distinct and separate discipline within business schools. Numerous business incubators and entrepreneurship-focused organizations are cropping up across the nation. But HBCUs and Black business communities lag behind.

The Chronicle of Higher Education targeted the problem of priority at many HBCUs in its article, "Sending the Wrong Message About Historically Black Colleges" featured in its "Innovations" section published online earlier this year.

The problem? Sending an inadvertent message that HBCUs place a higher value on sports and marching bands than academic rigor. That's the conclusion of Marybeth Gasman, an associate professor of higher education in the Graduate School of Education at the University of Pennsylvania and Nelson Bowman III, the Director of Development at Prairie View A&M University (PVAMU) in Texas. PVAMU is a historically Black university.

The lack of proper priority poses a much bigger problem when the world of innovation is racing past HBCUs at the speed of the Internet, and the average Black entrepreneur can rattle off the nicknames of numerous college sports teams but has little knowledge of the names of angels, venture capitalists and serial entrepreneurs who are using creative means of raising capital to pave paths of success online and offline.

Where's Funding For Black Entrepreneurs?

A recent report by CB Insights offered a stark revelation: Blacks are under-represented in investments in American innovation. The data show that Black entrepreneurship in technology and Internet innovation lacks funding. Is the problem due to a dearth of prepared entrepreneurs reaching a level of angel and venture capital funding or a high number of Black innovators fail in locating funding for their projects? The report pointed to this startling data:

87% of VC-backed Founders are White
12% are Asian
1% are Black
All-Asian Teams Raise Largest Funding Rounds

The funding data are, however, out of line with the demographics of the population and growth of entrepreneurs among minority populations. According to Innovation Daily and, rates of entrepreneurship among among African Americans grew 45% from 1997 through 2002 (the latest Census data collecting information on business ownership at the time of this posting). Asian and Native American business ownership grew 24% during the same time period.

Need For Entrepreneurial Infrastructure

Entrepreneurship in Black America is increasing. Yet without proper infrastructure and channels from idea to fruition, along with widespread knowledge and understanding of the keys to successful entrepreneurship in the Digital Age, the skewed data that currently show Black America being left behind by a whirlwind of Internet entrepreneurial activity will continue to worsen.

The vision of a technologically advanced America is here. A cursory peek behind the curtain of innovation reveals an all-too-familiar scene of an overwhelmingly White population of innovators, entrepreneurs, angels and venture capital investors. Minus the current over-represented population of Asians, the scene resembles any previous era of innovation in American history.

In this era, however, Blacks are free to engage in entrepreneurship, compete in technology based and Internet-based innovations and invest in the future of American innovation. Yet, the question remains: where are Black entrepreneurs and investors?

Media Awareness

Mainstream media have failed to properly cover this important evolution of American business. It may be left to Black-owned media to delve into this monumental issue of American entrepreneurship and inform Black America (and America as a whole) of a new era of innovation that continues to look like historic eras in which Blacks and other minority groups faced tremendous institutional hurdles.

To address the issues of growing challenges facing Black American entrepreneurship, over the next several weeks I will present three voices on the subject, in a series focusing directly on innovation in Black America. Over the next three posts, I will introduce you to successful entrepreneurs who will shed light upon the challenges facing Black innovators and investors. You will both read and hear interviews conducted with these successful American entrepreneurs on the issue of Black innovation in America today.

Interviews with Experts on Innovation

The goal of these interviews is not solely to identify problems, but to introduce solutions. I welcome your feedback and solutions-oriented suggestions.

2010-09-02-LauranBonapartcropped.jpg Lauran Bonaparte of Lauton Capital Group.

With more fifteen years of operational and management experience, Ms. Lauran Bonaparte has developed a sharp eye for how businesses can obtain the necessary financing for their commercial projects. Her relationships with direct lenders and private equity firms afford her the ability to advise clients on the most efficient source for their capital needs. As a serial entrepreneur, her focus has been in real estate (both residential and commercial) with a new look towards large scale development projects in the US and abroad.

2010-09-02-DaveLavinskycropped.jpg Dave Lavinsky is president of Growthink.

Mr. Dave Lavinsky is an internationally renowned expert in the fields of business planning, capital raising, and new venture development. Over the past decade, Mr. Lavinsky has guest lectured at top universities, developed over 100 business plans, and has written hundreds of articles on entrepreneurship, business planning and capital-raising. Since 1999, Growthink has helped thousands of entrepreneurs develop business plans and raise funding to start and grow their businesses.

2010-09-02-JohnathanMHolifieldcropped.jpg Johnathan M. Holifield is the founder of the consulting firm Trim Tab Advisors™ and the visionary behind Trim Tab Leadership™, a strategic and tactical leadership process that enables individuals and organizations to achieve exponentially targeted business goals and community impact.

Mr. Johnathan Holifield is a former professional football player and holds master's of education and law degrees. He was the founding executive director of a major market, regional technology and innovation organization, and served as chief executive of organizations focused on economic empowerment and human services and urban parks restoration. He has written and spoken extensively on topics such as growth entrepreneurship, regional, green-based and technology-led economic development, civil rights and responsibilities and 21st organizational innovation.