In a recent report analyzing the Black-white wealth gap, McKinsey & Company consultants highlight the barriers and interventions to developing community wealth through business ownership and entrepreneurship. The racial wealth gap, exacerbated by the COVID-19 pandemic, is projected to cost the US economy $1 trillion to $1.5 trillion per year by 2028. Statistics around ownership and wealth – only 5% of Black Americans hold business equity (compared to 15% of white Americans); the median white family’s wealth is over 10x the wealth of the median Black family’s – further highlight this gap.
Barriers to business building for Black entrepreneurs include economic, market, sociocultural, and institutional barriers, which are all linked to racial discrimination in the United States. Economic barriers around access to capital affect scaling and growth; according to the report, Black entrepreneurs are three times as likely as white entrepreneurs to say that a lack of access to capital negatively affects their businesses’ profitability and almost twice as likely to cite the cost of capital.
The article calls for key interventions across public, private, and social sector stakeholders, including implementing policies that produce equitable outcomes, enabling equitable access to capital, building business capabilities, facilitating knowledge sharing, and expanding opportunity for mentorship and sponsorship. RVC is working to increase our offerings of educational and financial resources for BIPOC-owned startups, understanding that the impact of closing the racial wealth gap can restore trust in institutions and strengthen our state and country economically and socially. Looking to contribute? Please contact us firstname.lastname@example.org to get involved or access resources.