Crowdfunding has opened up a world of opportunity to people searching for capital, but that doesn’t mean those opportunities extend equally to all segments of the population. BlackStartup debuted a crowdfunding platform today that features projects and ideas benefitting the African-American community.
“Access to capital is a bigger problem in the African-American community than in non-minority communities,” said founder Nathan Bennett-Fleming in an interview with VentureBeat. “Crowdfunding is a powerful solution to address its unique set of challenges. I want to promote the idea of community reinvestment and provide people with a dedicated way to not only achieve innovation within the space, but also address social systemic problems.”
A University of Michigan study found that while African-Americans are almost twice as likely as Caucasians to begin the new business creation process, businesses owned by Caucasians exist at more than twice the rate of those owned by black individuals. Fleming calls this the “black startup gap” and outlined multiple factors that perpetuate it, with a lack of funding as the first. He said most members of the black community start businesses on personal savings, credit, and the support of their friends and family because they have historically been discriminated against in terms of loans, funding, and resources. While these problems are getting better, people within the community still have limited interactions with angel investors and venture capitalists, and don’t feel there are viable financial channels bring their business to the next level.
Bennett-Fleming worked at Goldman Sachs during a college summer, attended law school, and worked on crowdfunding legislation surrounding the JOBS Act. He witnessed the difficulty that people in the African-American community had trying to find financing and realized that crowdfunding could help democratize access to capital as well as draw on the strength of the community. Along with classmates of his from Morehouse - Olugbolahan Adewumi, Elgin Tucker, Kyle Yeldell, and Christopher Hollins- they set out to build BlackStartup.
“Our community is under-valued and highly profitable,” he said. “There is already a strong affinity within the community on the ground and the ability to market directly to a community that is under-marketed creates a significant value proposition. There is already a trend towards more focused, niche crowdfunding platforms. It is a vehicle to better use the tremendous consumer and wealth power of a specific community to take on its challenges.”
The site takes a standard approach to crowdfunding- a selection of vetted projects are featured on the homepage with a project description, background about the founders, and specific goals. Members of the community back projects that pique their interest and if the goal is successfully reached, the project owners get the money to carry it out. Seven projects went live with the launch today, including a site that drives commentary on news of the day, a math curriculum taught through playing the piano, a family business that makes handmade hair products, and a mobile bakery that teaches people how to make desserts.
BlackStartup recently won the Yale Entrepreneurial Institute’s Fellowship, which invokes $20,000 in seed capital, an elite mentor, and a 10 week business boot camp in New Haven, Connecticut. Bennet-Fleming said his ultimate goal is to provide a funding solution that extends to all marginalized communities on a local and national level, to help them overcome obstacles attracting capital. BlackStartup is based in Washington, DC.