By Orlando Watkins, Vice President for Programs
Sometimes what makes a fund noteworthy isn’t the money.
Around the country, we often hear statistics that highlight the challenges entrepreneurs of color have in getting funding to build and grow their businesses. In response, a rising number of businesses and philanthropic entities are making investing in businesses of color a higher priority in their work.
Boston is fortunate to have some of these kinds of funds, and we at the Boston Foundation are proud to partner with a number of organizations that provide capital for businesses of color at a lot of different levels.
We are also excited to talk about a new effort that we hope takes this funding support to a new level. In 2017, TBF with the support of $2 million in seed funding from Eastern Bank, created the Business Equity Fund. It’s designed to provide critical growth capital to successful businesses owned by people of color who otherwise have found those growth funds hard to come by.
But BEF provides a great deal more than just loans.
The Fund is one element of the larger Business Equity Initiative – a three-part program that matches entrepreneurs of color with mentors who can provide counsel and help them develop and refine business strategy, connects them with some of New England’s largest businesses through the Greater Boston Chamber of Commerce’s Pacesetter Initiative, and if they can demonstrate potential for growth, gives them access to capital.
Why does a community foundation get into the business capital arena, working with for-profit companies to help them succeed?
In short, it’s because we see these investments as addressing critical community needs. In fact, it’s part of the charitable mandate of the fund. We’re looking to support successful minority-owned businesses, because our work has told us that building an entrepreneurial class in the black and Latino communities is good for the community, and not just economically. We know that these entrepreneurs tend to give back to their communities. They become more civically involved. They model success and serve as mentors. And they create jobs. That combination of economic and civic impact helps transform communities.
The social justice and racial equity lens is baked into the process. Our investment committee is not only straight up qualified to evaluate businesses financially, they also are community leaders of color who can recognize the critical ways that business leaders can shift communities, whether it’s by hiring immigrants and minorities, sponsoring community events or leading with words, deeds and good works.
Selecting the right entrepreneurs creates a virtuous cycle. As well-prepared, established and well-vetted businesses, these entrepreneurs will be able get what they need, build their business, and repay their loans so that money can go out again to a new generation of firms. At the same time, we will continue to raise money to expand the number of loans the Fund can offer. Since the initial investment from Eastern Bank, we have been able to raise another $1.5 million toward an aspirational goal of reaching $10 million or more.
To date, the Investment Committee has approved four transactions – all to established businesses with at least $800,000 in annual sales and with strong visions for growth and job creation: Lancaster Packaging, DRB Facility Services, Five Star Plating and Tartt’s Child Care, Inc. They are very different businesses, with different needs for growth, but they share a commitment to success, job creation, and community building.
We share that commitment, too. And through the Business Equity Fund and Business Equity Initiative, we are among a web of committed partners creating a strong pipeline for Black and Latinx-owned business success.To learn more about the Business Equity Fund, visit http://tbf.org/BEF