Local VC Firm Launches Diversity Fund (Finally!)
Bravo, Advantage Capital! It's taken two years to hear of any Venture Capital firms in St. Louis doing this. Let's hope other STL VCs are emboldened to do the same.
Advantage Capital launched a new fund supporting minority-owned businesses with the goal of closing the racial wealth gap, reports James Drew on STL Inno. Advantage Capital aims to back and support 40 – 50 businesses in the next 8 years country-wide.
The fund was set up in response to the social unrest following the murder of George Floyd in the summer of 2020. In a blog post explaining their rationale, the venture capital firm said Black entrepreneurs start out with one-third of the seed capital of their white counterparts, which makes it harder to attract follow-on investment.
“The typical white household has eight times the wealth of the typical black household. This wealth gap results in a start-up capital gap. Black entrepreneurs begin with one-third of the capital of their typical white counterpart.”
This lack of capital and collateral makes it harder for entrepreneurs of color to attract outside funding. A fund that focuses on growth-ready MBEs seeks to mitigate these realities, and in doing so, makes a critical first step in eradicating wealth disparities in minority communities.”
Writing on Linkedin, Sandra Moore, Managing Director and Chief Impact Officer at Advantage Capital, said she believes this will create endless possibilities by opening high-paying, high-opportunity employment:
“I wholeheartedly believe increasing investment in minority-owned businesses – and knocking down historical barriers to flexible risk capital – can change lives and uplift underserved communities. We have an opportunity (and obligation) to offer economic security to disinvested communities with quality jobs that deliver:
– Family-stabilizing benefits, such as health insurance and paid time off.
– Wealth creation with access to retirement plans and performance-based bonuses.
– High wages and exposure to employee training opportunities.”
It’s taken a surprisingly long time to hear of any Venture Capital firms in St. Louis doing this, despite widespread unrest on the streets of Downtown and Central West End in 2020. Let’s celebrate Advantage Capital for taking the first step – may you embolden your industry peers!