David A. Hinson, former National Director of the Minority Business Development Agency (MBDA) at the U.S. Department of Commerce under the Obama Administration and a former financial columnist for The Network Journal, was tapped to lead a brand new equity fund that will invest in diverse businesses.
Launched this week by the Schultz Family Foundation with an initial allocation of $100 million, the Entrepreneurs Equity Fund (EEF)’s ultimate goals are to foster a more inclusive economy, create jobs, and build wealth in historically marginalized communities.
Investing in scalable solutions and partnerships in communities across the country, the Foundation argues, will help tackle the barriers and roadblocks that prevent individuals from reaching their full potential and, in doing so, strengthen our communities and our nation.
“There are a growing number of innovative, growth-oriented, diverse-owned businesses poised to join the middle market. But for too many of them, capital is out of reach because too often capital flows to the best relationships, not the best deals,” Hinson says.
“By supporting these companies, we believe that they will not only outperform in terms of financial returns but lead the way in creating positive social outcomes, jobs, and wealth in historically underserved communities.”
Foundation President Tyra A. Mariani adds, “Every person, regardless of race or background, deserves an equal opportunity to realize their dreams. Unfortunately, in America the color of your skin and where you grew up are the most reliable predictors of economic success. We believe that investing in underrepresented entrepreneurs and diverse-owned businesses will be an efficient and effective means for forging a more inclusive economy, reducing the wealth and employment gaps, and strengthening our democracy.”
According to a September 2020 Citi report, providing fair and equitable lending to Black entrepreneurs alone over the past 20 years would likely have resulted in the creation of an additional $13 trillion in business revenue and potentially created 6.1 million jobs per year.
Data suggest that strengthening emerging, high-potential businesses led by diverse founders, such as businesses that are growing revenue at a 15 percent annual rate, and positioning these businesses to become middle market companies (e.g., generating annual revenue of $10 million to $1 billion) has the potential to be a powerful way to increase economic and social outcomes for historically disadvantaged communities.
“America’s future rests on our entrepreneurial fire. But in recent years, the spark within many entrepreneurs has struggled to find the oxygen to burn bright. The causes are many: predatory practices, lack of access to capital and social networks, the need for learning and community, and the systemic failures that lead some to not even try,” says Howard Schultz, co-founder of the Schultz Family Foundation and interim CEO of Starbucks.
“For too many people today, the American dream feels out of reach. I find this to be unacceptable, which is why we are launching this fund to invest in diverse businesses that have unfairly been excluded from opportunity for too long despite their enormous potential to help rebuild our country.”
Recognizing that all businesses need more than just capital to grow, EEF will also underwrite philanthropic grants designed to improve the operating environment for underrepresented entrepreneurs and diverse-owned businesses by supporting them with training, executive mentoring, data collection, research and policy development.
Hinson brings to his role as managing director and head of the EEF more than 20-years of executive experience, extensive knowledge of capital access, acquisitions and global business development for diverse-owned businesses.
Prior to joining the Foundation, he was senior vice president in the Private Wealth Services division of Ategra Capital Management LLC. He was founder and president of Wealth Management Network, a New York City-based wealth management advisory practice, and held management-level positions at Envestnet and Bank of America – all before joining the Obama Administration.
As MBDA national director he served as senior advisor to the Administration on the growth and global competitiveness of the nation’s eight million minority-owned businesses. He led the agency to its highest five-year performance, providing over $19 billion in contracts and capital to diverse businesses