June 30th 2023.
Living Cities and Known are coming together to tackle the issue of underinvestment in Black, Indigenous, and People of Color communities. They are launching the Cities Catalyst Fund III, a $100 million fund to provide financial support to entrepreneurs of color, who are often overlooked and unable to get much-needed help.
The fund will be managed by the two organizations, and is also intended to support diverse fund managers who will distribute the money to business owners. This is an important step, as Black-owned firms are usually not used as vehicles to provide capital to minority entrepreneurs.
Living Cities’ President and CEO Joe Scantlebury commented on the situation: “The level of private capital and public funding available to brilliant, innovative, and hard-working entrepreneurs of color is shamefully low.” This is evident in Federal Reserve data, which showed that only 60% of BIPOC business owners received full funding from banks, compared to 80% of their white peers.
Scantlebury further explained that this disparity was a continuation of policies and practices which enshrined white economic privilege and incented anti-Blackness, resulting in economic violence and wealth extraction from people of color. He added that, “By 2045, our nation will be a multicultural, multiracial, and multiethnic plurality, so economic practices that enable us to build a more inclusive and equitable economic order must begin now.”
This urgency is further highlighted by a Citi Global Perspectives & Solutions report, which estimated that racial inequality in the United States has caused a loss of $16 trillion in GDP. This deficit is mainly due to gaps in wages, access to housing and higher education, and investment in Black-owned businesses.
A further report revealed that 56% of Black business owners face difficulties when trying to obtain credit, and this restricts their ability to grow their businesses. This is especially concerning, as access to capital is essential for any business owner.
Living Cities and Known are still inviting investors to join the fund, with more details to come. With their combined effort, they hope to provide much-needed support to entrepreneurs of color, and to build a more equitable economic order.
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