Minorities and Venture Capital: A New Wave in American Business

Back in 2003, the Kauffman Foundation published a report that detailed a growing interest by venture capitalists to fund minority-owned businesses. Here is an excert from the web site:

The report MINORITIES AND VENTURE CAPITAL: A New Wave in American Business, based on a study by Dr. Timothy Bates of Wayne State University and Dr. William Bradford of the University of Washington, finds investments in minority business enterprises (MBEs) resulted in healthy returns equal to, if not slightly higher than, traditional investments by mainstream venture capitalists.

“We set out to find out if minority-oriented venture capital investing was solid,” said study co-author Dr. Timothy Bates, distinguished professor at Wayne State University. “We found strong, preliminary evidence of a robust minority venture capital industry.”

Key Findings

  • Minority enterprise venture capital investing is quite profitable. The average investment per firm was $562,000; the average gross yield per firm was $1,623,900, generating an average net return of $1,061,500.
  • Minority-oriented venture capital funds did not concentrate in high tech. Unlike the broader industry, which invested heavily in high-tech ventures, a more diverse portfolio kept funds focused on MBEs from their colleagues’ steep slump.

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It would be interesting to see how the data may have changed over the past couple of years. More venture capital is still needed to be invested in minority owned businesses in order for many of these high-potential companies to expand to a level where they can be viable, competitive enterprises. Investments in minority-owned businesses are no more or less risky than any other business entity that a venture capitalist might be investingating. The opportunity is right and the time is now to make this a reality that provides positive benefits not just to the venture capitalist and the business owners, but also to the business’s customers, employees, and the communities in which they reside.

You can read the full report at http://www.kauffman.org/pdf/minorities_vc_report.pdf. Enjoy!

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About Paul Wilson Jr.
Paul Wilson, Jr. is a "Dream Catalyst" and Marketplace Pastor for leaders and entrepreneurs. He is driven to lead people to unleash God’s potential in their lives through their purpose, passions, and professional skills. He equips leaders with creative, faith-based strategies to flourish spiritually and professionally, while operating from several multi-media platforms, including TV show host, inspirational speaker, and stimulating writer. Paul is the President of Kingdom Business University, which utilizes workshops, consulting, and coaching services to ignite Christian catalysts maximize their God-given mission in the marketplace. He is the author of the life purpose igniter “Dream B.I.G. in 3D: How to Pursue a Bold, Innovative God-Inspired Life!” He is also the host of Passion in Action, a motivational and educational faith-based Internet TV show for social entrepreneurs, business leaders, and community change agents. Contact us today to learn more about how he can help your business, church, or community to thrive on purpose!

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