A guide to equity crowdfunding

Many statements about black consumerism are based on a flawed premise. Black people are starting businesses. In fact, African Americans are more likely to start a business than any other community in the United States Black millennials are even more interested in entrepreneurship than past generations, and black women are the fastest growing group of U.S. business owners in the past 20 years.

As the U.S. rate of entrepreneurship has declined in the past 30 years, entrepreneurial activity in the African American community has increased. The problem is access to capital. Black entrepreneurs start businesses, but—often—do not have access to the capital necessary to market and grow those businesses over time.

Barriers to Business Investing

 

Prior to equity crowdfunding, most African Americans couldn’t invest in hot, new companies serving the market, such as MayvennYeKim, or Lonzo Ball’s Big Baller Brand, even if they wanted to; regulations prevented it. More importantly, most black entrepreneurs could not turn to friends or family to invest in their small businesses. Not anymore.

Equity Crowdfunding Money for Ideas

(Funding an Idea. Image: Shutterstock)

Equity crowdfunding empowers anyone in the United States over 18 to invest in startups in amounts as small as $10. Prior to President Obama signing the JOBS Act into law, this privilege was restricted to wealthy accredited investors; about 10% of U.S. households. Risk comes with investing, but unleashing $1.2 trillion in black buying power to fund black businesses and real-estate endeavors is one of the greatest wealth building opportunities ever made available to the African American community.

African Americans have historically been frozen out of wealth building opportunities necessary to build generational wealth. Usually, when wealth building opportunities have been made available, it was only after other communities had access. This makes equity crowdfunding almost singularly unique in American history.

The community has found innovative ways to work around the problem in the past, with a mix of personal loans and informal business groups filling the void. One creative way is sou-sou organizations made popular by women in West Africa and the Caribbean.

Now, black investors and entrepreneurs have access from the beginning and can share in the economic gains made by startups growing and hiring. Moreover, black consumers—trendsetters—can use their dollars and influential platform to select which products, services, and solutions get funded from the beginning.

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