In the US, Black dollars, as well as Black lives, need to matter
For Black Lives to Matter, Black Dollars need to matter. Fixing that is harder than taking the knee and will take longer than a criminal trial – but it is what America must do, writes Joshua Jahani.
One year on from George Floyd's murder, not much has changed in African Americans' daily lives. The sad fact is that police brutality against African Americans will not end, as long as they are disproportionately living in the poorest, most dangerous neighbourhoods: the kinds of zip codes where police will always have their holsters unfastened. For Black Lives to Matter, Black Dollars need to matter. Fixing that is harder than taking the knee and will take longer than a criminal trial – but it is what America must do.
This doesn't mean handouts, reparations or patronisingly 'supporting Black owned businesses'. It just means opening up finance and investment to Black-owned startups, and channelling the enterprise and work ethic that Black communities have, but the finance industry has ignored for too long.
Social liberation ultimately relies on economic liberation. Young, Black entrepreneurs have few role models and even fewer investors to support them (can you name a Black billionaire? Or a Black-owned Silicon Valley startup or Venture Capital fund?) We need to move beyond the token gestures supported by celebrities, including rappers Killer Mike and Snoop Dogg for supporting Black-owned businesses at the consumer level, by circulating lists of companies to buy from.
Simply buying from Black-owned businesses in an act of white saviourhood is not enough. They need to have the same access to finance, growth and even flotation that white-owned businesses in the United States have. This is harder to implement than a one-off reparation cheque that would give us the immediate feelgood factor of celebrating that we have 'dealt with racism'.
The root of racial oppression lies in economics. There is a reason that Hitler started his campaign against the Jewish people through a Jewish business embargo: in a capitalist society, a community is only as powerful as their bank balance allows them to be.
13% of the American population is Black, yet only 9.5% of American businesses are Black-owned. To really understand the true size of this unfairness, we must look not just at the number of Black owned businesses but the size of them. According to the U.S. Census Bureau's Survey of Business Owners, 90% of Latino and Black firms do not have one employee other than the owners. This disparity is backed up by the sales data; the 19 million white-owned businesses generate 88% of the overall sales in the US, whereas Black businesses make up only 1.6% of total US sales.
What that means is Black-owned businesses have the entrepreneurship, but not the startup and scaleup capital – whether from banks, angel investors or VC funds – to grow. That growth would create jobs in Black communities, improve neighbourhoods, and mean police would feel very different when called out to that area.
This discrimination has deep historical roots in the United States and will take a generation to shift. When Black soldiers returned from fighting for their country in World War Two, they could only buy houses in Black neighbourhoods which would later turn into what some now call 'ghettos' with less investment in those areas. Even though this level of racial segregation was made illegal by the Civil Rights Act, laws don't change history, or its consequences.
Unsurprisingly, this has created stubborn income disparity; the average wealth for a Black household in America is $140,000 a year, 6.5 times less than for whites, which is $905,000.
Supporting Black enterprise can also create opportunities away from discriminatory workplaces, where across the board, Black people are more likely to be fired and less likely to be hired. But for business ventures to grow (or sometimes even just survive), founders need the capital to afford the time and resources to establish their market and niche. At the moment, the investment just is not there: White investors, who like all humans suffer from bias, support founders they can connect with on a personal level.
Silicon Valley, arguably the healthiest investment ecosystem in the world, is a notably white space. According to a study of 9,874 US business founders only 1% of start-ups receiving venture capital were Black. There is yet to be a Black entrepreneur who exists in the American psyche as first and foremost an entrepreneur – that needs to change. Whilst ex-talk show hosts, rappers and sports people may have turned into entrepreneurs, there still is not a Black Zuckerberg or Musk.
A healthy investment ecosystem for Black businesses starts with creating Black investors. VC firms and finance houses need to actively hire more African Americans into senior roles, and invest in accelerators and incubators for Black entrepreneurs, increasing the chance that the next tech unicorn is Black-owned.
Successful Black entrepreneurs need to be given visibility on mainstream media in order to show that there are paths to wealth for young Black people other than sport, music or, as unfortunately the case remains, crime. Ultimately, this would not just improve racial equality, but the state of capitalism in America.
True capitalism is meritocratic by nature. By unleashing the entrepreneurial potential of an untapped demographic, we can help America to maintain its economic and technological dominance on the global stage and make the American dream work for everyone, not just the Ivy League graduates who know how to write a sexy business plan and network with the right people.
