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“The lack of specifics on increasing access to equity capital for Black-owned businesses is troublesome, especially considering the recent data on how large the disparities are,” said Craig Livingston, managing partner at the Exact Capital development group.
_____________ A city effort to increase public-private investment in Black-owned small businesses and entrepreneurship launched Wednesday by the de Blasio administration was immediately met with skepticism from the community it was designed to help.
The BE NYC initiative, which would be administered through the Department of Small Business Services, was developed with the cooperation of more than 1,500 Black business owners, activists and community leaders across the city, Mayor Bill de Blasio said.
“The idea is to do something profound. It is to close the racial wealth gap,” the mayor said.
De Blasio noted that during the coronavirus epidemic, Black-owned businesses are twice as likely to close permanently than a white-owned businesses. African-Americans are about 22% of the city’s population but account for only 2% of New York businesses ownership, he said.
The de Blasio administration hasn’t helped the statistics.
A July investigation by Crain’s found that the city snubbed minority-owned businesses when spending on its Covid-19 response. The city granted those businesses just 5% of $3.4 billion in such contracts and spending. Only 1% of the contracts went to Black-owned businesses.
“Something’s wrong about that picture, to say the least,” de Blasio said.
The mayor’s inclusion plan drew criticism due to its vague nature and lack of hard funding numbers that would be allocated to Black-owned businesses and Black entrepreneurs.
“One of the frustrations we consistently have is there are a lot of press statements and programs and announcements but there are never specific dollar amounts,” said the Rev. Reggie Bachus, president of the 400 Foundation, a consortium of Black religious leaders who promote economic development.
The de Blasio administration’s new plan focuses on three lines of improvement to use relationships with a trio of private firms in the banking industry.
The first hallmark of the plan is access to capital and increasing the ability of Black business owners to enter into institutional equity markets. Goldman Sachs said it will provide access to affordable financing and business education, but no dollar amounts were pledged. Ernst & Young plans to offer 2,000 hours of free one-on-one consulting to Black business owners.
The second area is helping black entrepreneurs gain a greater foothold on the digital marketplace. Together with the SBS, Mastercard is creating a virtual storefront for Black entrepreneurs.
The city said it will generate new sources of revenue through government contracts.
“There are always more ants than elephants, those well-known well-branded organizations out there, but they don’t have the delivery system to get capital to those who are well positioned with community insights,” Bachus said. “We need dialogue and conversation and not one-sided directives.”
Other Black business leaders had stronger criticisms.
“There’s doing something meaningful and real and then there’s the head fake. This looks more like a head fake to me,” said Craig Livingston, managing partner at the Exact Capital development group.
As chairman of the New York Real Estate Chamber—the largest advocacy group for Black developers in the state—Livingston is part of the Black Business Collaborative, which includes the Greater Jamaica Development Corp., Full Spectrum New York, Bedford-Stuyvesant Restoration and New York State Association Contractors—none of which was consulted on the BE NYC initiative, Livingston said.
“Who are these 1,500 folks they talked to? I have no idea,” he said. “What’s really concerning about that is when you’re talking about groups like the ones we mentioned, these groups represent companies at the top of the MWBE ecosystem.”
The BE NYC road map document provided by the SBS lists the Greater Jamaica Development Corp. and Bedford-Stuyvesant Restoration as among the organizations that helped shape BE NYC, along with the Council of Urban Professionals, the Haitian American Caucus, the state’s NAACP chapter, the National Urban League, Gerald Adolph, the Rev. Ebony Kirkland, Minister Fay Henderson and Bishop Raymond Blanchette.
Livingston considered the lack of specifics on increasing access to equity capital for Black-owned businesses is troublesome, especially considering the recent data on how large the disparities are.
A 2017 study by the Knight Foundation found woman- and minority-owned hedge funds control less than 1 percent of the asset-management industry. Minority-owned mutual funds control less than 0.5% of their total asset class, while minority-owned private-equity firms control less than 8% of their class.
“What percentage of the city budget is being directed to this?” Livingston asked. “It’s time to respond to Black economic interest with numbers and dollars.”
At the news conference, SBS Commissioner Jonnel Doris acknowledged there’s not much the city can pledge in terms of hard dollar amounts without a federal rescue package from Washington.
“We need federal support,” Doris said. “Our small businesses in this city cannot make it without the federal government stepping in on the financial side and helping them.”