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What Is the the 'Friends and Family' Seed Funding Gap?

In short, the odds are stacked against African Americans who want to secure funding from their friends and family to launch their own business.

Pew Research Center has found that whites in the US have access to $142k and that African Americans have access to merely $11k from this common funding path. According to the census bureau, 30k is the capital starting point to get a startup off the ground, which leaves African American startups at a significant disadvantage. Jessica Norwood, an entrepreneur, activist, and advocate for equity, has seen what this looks like first hand. Whether it’s disenfranchised farmers in rural Alabama or discouraged youth in West Baltimore, she knows how a difference of $131k can have far reaching implications past just startup capital. She saw the advantage of using this concrete problem as a medium in which to address the larger issue of African American wealth creation. 

At the start of 2016, Jessica partnered with Kevin Jones to convene a working group to establish the importance of this question, pose diverse and actionable solutions, and then go and implement them in the places that matter. This initiative, called the Runway Project, is housed within Jones' Neighborhood Economics.


How do we solve this?

Although a work in progress, the group has already painted a vivid picture of the funding landscape for African Americans. All of these conditions point towards a lack of pre existing solutions that are culturally appropriate, or that generate trust and real impact. But this problem has proven to run deeper than inefficient funding mechanisms or the people that are implementing them. Ultimately, we’ve come to see that the most glaring problems exist at an infrastructural level. 

After a powerful summit in NYC in April, the group has identified the need to implement a series of pilot projects. The goal of these pilots will be to test out our theory of change—that in order to design meaningful solutions, they will need to be both locally and culturally appropriate, but also scalable past the pilot stage. 

The pilots are going to be in Cincinnati, D.C., and Baltimore.

In Cincinnati, we're partnering with Derrick Braziel and his MORTAR accelerator for neighborhood scale businesses, working with minority led startups.

In DC, we're working with Jason Towns and Groundwork, his accelerator and companion $10 million seed fund for black tech entrepreneurs. Jason also leads Village Capital's DC iteration of its top ranked impact accelerator. Both Jason and Village Capital work out of Impact Hub DC.

Finally, we're working with Rodney Foxworth in Baltimore for our third pilot. As the co founder of one of the new, 2.0 Impact Hubs,  Rodney and his team are using their events and co working space as a platform to bring a diverse set of stakeholders together to create inclusive community wealth in Baltimore. Rodney is raising a $30 million philanthropic evergreen seed fund to invest in neighborhood scale businesses in marginalized communities. He hopes to develop and deploy a suite of tools from the Runway Project to help his work better solve the friends and family funding gap.


The Runway?

The Runway metaphor came to us naturally during the first stages of the project. In conversations we kept hearing the same thing over and over again -- that the underlying problem we are trying to solve is not so much related to the entrepreneurs themselves as it is to the infrastructure around them. What we are trying to solve is not a pilot problem, it's a runway problem.