New $50M evergreen investment fund will support the development of Black entrepreneurs and businesses, providing catalytic investments with a focus on closing the racial wealth gap
Washington, D.C. (May 20, 2021) — Today, the Black Economic Alliance Foundation (BEA), in collaboration with Wells Fargo, launched the Black Economic Alliance Entrepreneurs Fund (BEA Entrepreneurs Fund) to accelerate the growth of Black entrepreneurs and business owners. The $50 million evergreen fund will provide seed, start-up, and early-stage capital to businesses founded and led by Black entrepreneurs.
The launch of the BEA Entrepreneurs Fund is anchored by Wells Fargo with a $20 million commitment over five years to kick-start operations and investments, and to serve as a thought partner to the BEA Foundation in building this innovative investment vehicle. The BEA Entrepreneurs Fund will recycle 100 percent of returns to support ongoing operations and additional investments in Black-owned businesses and entrepreneurs.
“Business ownership has been one of the best paths to multi-generational wealth creation for some Americans, but too few Black entrepreneurs have secured the financial resources necessary to launch and grow successful businesses. The Black Economic Alliance is proud to marshal resources to support more Black-owned businesses and founders, which will leverage hiring more Black workers and additional investment in Black businesses and communities,” said David Clunie, Executive Director of the Black Economic Alliance. “We are thankful to Wells Fargo for providing $20 million in anchor funding to catalyze the launch of this important, long-term investment in Black entrepreneurs.”
“The BEA Entrepreneurs Fund will invest in a new generation of Black business leaders and entrepreneurs. The evergreen fund will help close the opportunity gap by enabling access to capital that promising business ventures need to grow,” said Tony Coles, Co-Chair of the Black Economic Alliance; Executive Chairman and CEO of Cerevel Therapeutics. “We are grateful to Wells Fargo for helping to jumpstart this game-changing investment fund that will catalyze a pipeline of Black talent.”
“Too often, Black entrepreneurs struggle to access the capital they need to advance their businesses. The BEA Entrepreneurs Fund will allow Black business talent to strengthen their bottom line, which will reap other benefits such as hiring more Black employees, strengthening the communities they serve,” said Charles Phillips, Co-Chair of the Black Economic Alliance; Managing Partner and Co-Founder of Recognize; Former CEO of Infor. “Having financial partners who recognize the importance of our mission is key to catalyzing this fund.”
“We are committed to advancing racial equity in the communities we serve and beyond,” said Wells Fargo CEO Charlie Scharf. “The Black Economic Alliance Foundation is well positioned to develop a strong pipeline of entrepreneurs who can accelerate Black-owned businesses and economic growth across the United States. We look forward to bringing our capital and expertise to this important collaboration.”
BEA Entrepreneurs Fund investments will be made in the form of equity via convertible debt, by providing an equity stake in exchange for the seed capital investment. The Fund will also make straight loans to Black start-up businesses. All investments will be made available via a competitive application process, expected to begin later this year. Once the BEA Fund begins investing, it will accept applications from all interested and eligible Black entrepreneurs across industries nationwide, including emerging business founders, alumni from historically Black colleges and universities, students, and participants in programs that focus on Black business development, among others.
Studies have shown that successful business ownership has been one of the most effective paths to wealth creation and economic security for Americans but securing the necessary financing to do so often proves to be the greatest roadblock to success—especially for Black entrepreneurs. According to the Harvard Business Review, before 2020, Black founders received roughly 1% of venture capital financing. Reuters reported that even after the unprecedented influx of investment into Black causes over the past year, only approximately 3% of the $147.6 billion venture capital deal volume in 2020 went to Black-founded companies. And data released by the Federal Reserve in 2020 showed that only 26% of Black business owners received the full amount of financing they sought from banks, which is a small fraction compared to a little over 54% of white business owners, 33.8% for Asian business owners, and 32% for Latinx business owners.
The launch of the BEA Entrepreneurs Fund follows the announcement of the Center for Black Entrepreneurship (CBE), a joint venture among the Black Economic Alliance Foundation, Spelman College, and Morehouse College. The CBE will be the first-ever academic center of its kind to produce, train, and support a new generation of Black entrepreneurial talent. A portion of the BEA Entrepreneurs Fund will be earmarked to invest in CBE participants.
“Black Americans are woefully underrepresented in receiving venture capital funding, and we know it isn’t due to a lack of talent, ambition or ideas,” said Tia Breakley, BEA Board Member; Chief Strategic Development Officer and Chief Governance Officer, Blue Meridian Partners. “Creating new avenues of access to capital for Black entrepreneurs will help lower the barrier to entry in the business world and allow Black founders to shine. I look forward to seeing the real and lasting impact the BEA Entrepreneurs Fund will have on our communities and talent pool.”
“Gaining access to capital is one of the most difficult hurdles Black entrepreneurs face when just starting out. The BEA Entrepreneurs Fund is a new avenue that offers Black talent a way to secure the necessary financing and get the resources they need to thrive,” said Kneeland Youngblood, BEA Advisory Board Member; and Founding Partner and Chairman of Pharos Capital Group. “Anchored by Wells Fargo, this evergreen fund will offer aspiring entrepreneurs an opportunity to develop their business ideas and be a value add to the broader economy.”
“In order to advance the next generation of Black innovators, technologists, and leaders, we need to facilitate their access to capital and activate all of the levers necessary to foster a supportive ecosystem,” said Chris Lyons, BEA Advisory Board Member; General Partner, Andreessen Horowitz, Cultural Leadership Fund and Global Advisor to Verizon Media. “Bridging the gaps for Black innovators will not only pay dividends in the Black community, it will reap endless benefits in our broader economy. We’re thankful to Wells Fargo for their anchor support, and we look forward to growing the BEA Entrepreneurs Fund in order to catalyze more Black talent.”
To learn more about the BEA Entrepreneurs Fund or the Black Economic Alliance Foundation, please visit https://foundation.blackeconomicalliance.org/bea-entrepreneurs-fund/.
About the Black Economic Alliance Foundation
The Black Economic Alliance is a coalition of Black business leaders and allies committed to driving economic progress for the Black community with a focus on work, wages, and wealth. The BEA Foundation is the 501c3 charitable nonprofit affiliate of the Black Economic Alliance. The BEA Foundation works with leaders in the private, public, and nonprofit sectors to produce, research, and analyze data to diagnose the obstacles to Black economic mobility and prescribe practical solutions to create better access to good-paying jobs, a living wage, and wealth creation for Black people. The BEA Foundation also crafts programs that convene leaders across industries around initiatives that will produce better economic outcomes for Black people. For more information, visit: foundation.blackeconomicalliance.org
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a leading financial services company that has approximately $1.9 trillion in assets and proudly serves one in three U.S. households and more than 10% of all middle market companies and small businesses in the U.S. We provide a diversified set of banking, investment and mortgage products and services, as well as consumer and commercial finance, through our four reportable operating segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth & Investment Management. Wells Fargo ranked No. 30 on Fortune’s 2020 rankings of America’s largest corporations. In the communities we serve, the company focuses its social impact on building a sustainable, inclusive future for all by supporting housing affordability, small business growth, financial health and a low-carbon economy. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories.