The New Jersey Economic Development Authority (EDA) released a request for information (RFI) seeking insights into the obstacles and disparities Black- and Latinx-led start-ups in New Jersey face as well as suggested measures that could address these inequalities. One potential solution the EDA is considering is a diversity seed fund that would focus on driving capital to Black- and Latinx-owned enterprises.
“Diversity is one of New Jersey’s greatest strengths, and it is time that our start-up sector reflects that,” said Gov. Phil Murphy. “The information we receive through this RFI will be critical to understanding Black and Latino entrepreneurs’ needs and to ensuring we craft effective tools to move us toward our goal of building the most diverse, inclusive innovation ecosystem in the nation.”
Supporting small business and enhancing access to capital for Black- and Latinx-owned businesses are central pillars of Governor Murphy’s comprehensive Economic Development Plan. This is critical because, according to a recent survey by Diversity VC and Rate My Investor, nationwide less than one percent of all venture capital investments go to Black-owned firms and less than two percent of investments go to Latinx-owned companies. This not only deprives members of these populations of opportunity, but also creates massive opportunity costs by depriving economies and industries of the wide array of perspectives and experiences members of underserved populations could contribute.
“Under Governor Murphy’s leadership, New Jersey is reclaiming its historic leadership position in innovation – but we want to be more than just the most innovative state, we want to have the most diverse and inclusive innovation ecosystem in America,” said EDA Chief Executive Officer Tim Sullivan. “For too long, Black and Latinx entrepreneurs have been denied access to the early-stage seed capital that can help propel a business from vision to reality. With this request for information we are taking the first concrete steps to providing more capital to a broader array of New Jersey visionaries.”
The RFI will help the EDA fully understand the scope and characteristics of the challenges Black and Latinx business owners and entrepreneurs face when attempting to access public and private capital. It is also an opportunity for stakeholders to provide input that the Authority will use to craft solutions that meet investors’ and entrepreneurs’ needs. One solution the EDA is considering is a diversity seed fund that would make additional resources available for Black- and Latinx-owned companies.
“Proactively seeking feedback from Black and Latinx entrepreneurs is critical to ensuring that this effort will result in meaningful change,” said Lieutenant Governor Sheila Y. Oliver, who also serves as Commissioner of the Department of Community Affairs. “The EDA’s willingness to listen and learn from financial and business experts is an important step in helping to drive funding to innovative, high-growth companies in our underserved communities.”
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