- In the first half of 2021, $1.8 Billion was invested in Black-led startups
- The number of Black investors could double by 2024 with help from CrowdBases’s Black Venture Capital organization
- Rodney Sampson and other program speakers have actively worked in FCC Commissioner hearings to ensure diversity in the U.S. capital legislation
Scale School, a program of The Entrepreneurship Center at UNC’s Kenan-Flagler Business School, opened Rodney Sampson’s The Black Technology Ecosystem Investment Certificate. For nine weeks, aspiring Black investors and ally investors will learn how to specifically invest in Black capital, founders and the Black ecosystem. Many Black women attendees come from a wealth building initiative with The Links, Incorporated, a volunteer service of Black women in advancing African Americans.
“I was incredibly excited seeing almost 40 high net worth affluent and accredited Black people,” Rodney Sampson, Executive Chairman and CEO of Opportunity Hub (OHUB) and OHUB Foundation, the General Partner of 100 Black Angels and Allies Fund, told The Plug.
Last summer’s racial movement encouraged investment funds for Black startups to reassess economic opportunities for Black Americans. In the first half of 2020, $442 million was invested in Black-led startup founders, according to a Crunchbase report. The amounts grew to $589 million in the other half of the year and continued to $1.8 billion in the first half of 2021.
Black Americans earned $46,000 in median income in 2019 in comparison to $77,000 in white, non-Hispanic households, according to the 2020 Census report. In 2020, there was a slight decrease among Black household’s $45,000, compared to white households’ 74,000.
Sampson’s program aims to include more Black investors through his educational course. The first session of Sampson’s investing course provides early insights into capital investment, learning of looking for investor advice early on.
“The reason I wanted Brad Feld, a venture capitalist at Foundry Group, there first is that most people, whether you approach dominant society or are socially disadvantaged, aren’t aware of the startup ecosystem,” Sampson said. “We are aware of the ecosystem, hubs and these spaces; boot camps, pre-accelerators, accelerators, incubators, pitch competitions and venture funds.”
Black VC, an organization working to double the number of Black investors by 2024, projects that Black representation in venture capital grew from three percent of Black investors last year to four percent.
Larger venture capital firms are making efforts to increase diversity, but some have varied results.
Andreessen Horowitz’s Talent x Opportunity Fund, launched in June and caught criticism for their small donation of $2 million, according to a Reuters report. Kapor Capital, the venture capital investment sector of the Kapor Center for Social Impact, plans to work with other capital firms to train future investors from underrepresented groups.
Planned policy changes are yet another way to increase opportunity for Black investors.
President Biden signed The American Rescue Plan Act, which provided $10 billion to fund the State Small Business Credit Initiative (SSBCI). The act aids in financial assistance of any issues in the economy, healthcare system, government and individuals inflicted by the pandemic.
Sampson has also focused on policy solutions to the lack of representation in VC and has been frequently attending the U.S. Security and Exchange Commission (SEC) Commissioner hearings of the small business investment committee.
Last year, Sampson and other colleagues were asked to testify about an update to an SEC rule revamped to allow more people to invest. This process, known as the accredited investor modernization, adds to the “accredited investor” definition, one of the principal tests for determining who is eligible to participate in the U.S. Security and Exchange Commission’s private capital markets. The expanded definition increased the number of people who could be considered accredited by the SEC and able to invest in this asset class.
In the program, guests will speak on policies employments and engagement. Jervis Hough will talk about jobs in policy and how investors were influential in the evolution of one to five million in Regulation crowdfunding (Reg CF), where companies are able to offer and sell securities through crowdfunding.
Sampson along with other supporters advocate for democratization of capital via The Jumpstart Our Small Business Startups Act (JOBS), an act requiring SEC to create rules and reviews on capital formation, disclosure and registration. Supporter were modernizing the recent law to increase regulation crowdfunding from one to five million and Regulation A (Reg A), an exclusion from regulation of public offerings, went from $50 million to $75 million.
Crowdfunding was expanded for both Black founders and investors.
Equity Crowdfunding is another solution to close investment gaps. Sampson suggests limiting the liability of a crowdfunding intermediary or portal’s liability while adding a five-year grace period to comply with the rules. Sampson goes on to say that more minorities can make platforms and attract more minority entrepreneurs.
“They call it a startup community,” Sampson said. “Who knows how to do community better than Black people? That’s all we do. You can take any word and put it in front of the community and we should be the masters of it.”