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The racial wealth gap tilts the playing field against entrepreneurs of color, holding back our economy. The government helped create that wealth gap, and the government has an obligation to address it. I have a new plan to tackle it head on.
On average, Black, Latinx, Native American, and other minority households have significantly less wealth than white households. So they have less to put into their small businesses, and less collateral to get outside credit.
That disparity in startup capital is creating a small business gap that costs us millions of jobs & billions in economic growth. And it's another example of how the racial wealth gap in America hurts Black, Latinx, Native American, and other minority families & communities.
As president, I will launch a $7 billion Small Business Equity Fund to provide grants to entrepreneurs—not loans or loan guarantees. Loans aren’t as good as equity because they leave businesses with debt when they’re trying to grow. Equity helps businesses thrive from the start.
$7 billion ensures that if Black, Latinx, & Native American entrepreneurs start businesses at the same rate as white entrepreneurs, we could fully close the startup capital gap for the next ten years—supporting over 100,000 new businesses and 1.1 million new jobs.
But even if we fully close the startup capital gap, deep systemic issues will continue to tilt the playing field. 86% of venture capitalists are white, and studies show that investors are more likely to partner with entrepreneurs who look like them.
This tilts the field against entrepreneurs of color. So I plan to address this disparity head on too. I will require states and cities administering my new Fund to work with diverse investment managers—putting $7 billion in the hands of minority-and women-owned managers.
The Small Business Equity Fund will create jobs, spur economic growth, and move us closer to an America where everyone has a fair shot to succeed. And the entire cost of this plan will be paid for by my Ultra-Millionaire Tax. Read my full plan here: medium.com/@teamwarren/le…
