By Morgan Eichensehr for the Baltimore Business Journal
Maryland Technology Development Corp. and Harbor Bank are teaming up to help fund startup ideas for black entrepreneurs.
State-backed TEDCO is trying to fill a funding void for African American business ideas. McKeever "Mac" Conwell, a deal team coordinator at TEDCO, said one of the reasons there aren't as many successful startups and entrepreneurs in Maryland's black communities is that it can be difficult to access capital to help build on a good business idea.
"In talking with other entrepreneurs, we noticed a trend in the black entrepreneurial community, that there is this lack of friends and family funding," Conwell said. "There are a lot of reasons for this, but mainly, there is a wealth gap issue."
Most entrepreneurs, before seeking seed funding to bring their ideas to market, fund the initial build-out of whatever product or business idea they have with help from their own circles of friends and family. But minority communities often don't have many high-wealth individuals or friends with expendable capital to draw on to help them get their ideas off the ground, Conwell said.
The Minority Business Pre-Seed Fund is aiming to fix that. The fund will provide $40,000 to each of 10 entrepreneurs over four quarters. Half of the funding will come from TEDCO and the other half will come from Baltimore's black-owned Harbor Bank's in-house community development corporation. The first few rounds will serve as a pilot test of this new funding model for TEDCO.
“The [fund] is designed to be TEDCO’s initial attempt to grow entrepreneurship in underrepresented communities, with the goal of fueling innovation and economic development in Maryland,” TEDCO President John Wasilisin said in a statement.
The concept for the fund was born out of new diversity initiatives TEDCO launched last year.
Data from between Jan. 1, 2012 and July 1, 2015 showed that once they applied, black businesses were just as successful as actually earning funding through TEDCO's venture fund. The problem was that there weren't as many African American applicants. Wasilisin said the data pointed to a "funneling issue."
Show Full Article