By Elizabeth L. Carter, Esq.
As we celebrate Black Business Month and Black Philanthropy Month throughout August, many Black entrepreneurs are being robbed of their dreams and livelihoods because they are finding much difficulty in getting the funding that they need to sustain their business. Without sufficient capital to fully launch and grow their businesses, these Black entrepreneurs will not be able to create thriving enterprises that could financially support their families while also building their communities.
The struggle to get funding as a Black business owner has little, if anything, to do with merit or skill. It's also not often about a lack of product-market fit or customer acquisition. In fact, many of these businesses are fully operational with an existing market. Rather, the lack of funding for Black businesses and nonprofits is, quite simply, due to systematic racism: discriminatory bank lending practices, biased philanthropic giving, and exclusionary venture capital. As a Black woman entrepreneur and owner of a crowdfunding securities law firm (Elizabeth L. Carter, Esq., LLC) that specifically represents Black and Afro-Latinx business owners, I witness this funding problem all too often.
The racial disparities in private investing and banking make it nearly impossible for most Black entrepreneurs to raise capital. In addition, this disparity in funding helps perpetuate the wealth gap between Blacks and whites, which negatively impacts the sustainability of Black communities. This is heartbreaking on many fronts, but even more so during the wake of the one-year anniversary of George Floyd’s murder at the hands of police and the racial justice movement that transpired across the world thereafter.
Yes, there have been a handful of Black startups that have received significant funding in recent years, including a few that have surpassed the one million dollar mark. But let’s be real, those instances are far and few in between. Since 2015, Black and Latinx founders have received only 2.4 percent of the total venture capital raised, according to the 2020 Crunchbase Diversity Report.
The racial bias in traditional financing has caused many Black-owned businesses and nonprofits to turn to the general public to get the capital that they need for their ventures. This form of investment is called crowdfunding. Through Elizabeth L. Carter, Esq., LLC, I recently launched a fund called #BlackCapitalMatters Gift Legal Fund in order to support Black-owned businesses and nonprofits across the U.S. so that they may raise capital sustainably and properly. I found that this Fund is one of a kind and is necessary to underrepresented entrepreneurs who are interested in raising capital through crowdfunding and in need of critical legal support to successfully do so.
Through Elizabeth L. Carter, Esq., LLC and its nonprofit fiscal sponsor the Sustainable Economies Law Center, I am currently seeking philanthropic, corporate, and individual contributions to the #BlackCapitalMatters Gift Legal Fund, which will help subsidize securities legal services for Black-owned businesses, investment funds, and nonprofits seeking to raise capital.
To date, we’ve received applications from a variety of businesses and organizations offering a broad range of services. The applicants include Pennsylvania Avenue Main Street, a historically Black commercial district in Baltimore that is raising funds for revitalization projects; Prosperity Market, a mobile farmer’s market featuring Black farmers, food producers, and chefs in Los Angeles that aims to create food access in underserved communities; and Northeast Capital Fund II, LLC, an innovative mortgage financing and lending institution that aims to become the “Next Generation” global real estate lending platform (driven by Blockchain and smart contracts) to make homeownership, business ownership, and asset acquisition a possibility for capital-challenged communities.
If you want to support Black businesses and the Black community overall, there isn’t a better time to do so than now. The economic hardships caused by the recent pandemic and recession have only exacerbated the need for funding among Black-owned businesses. During the first few months of 2020, 41 percent of Black businesses permanently closed.
With each day, more and more Black entrepreneurs are launching crowdfunding campaigns to raise capital. Crowdfunding is a creative solution to a major problem but it still comes with its own pitfalls. Because many Black entrepreneurs start with such a small budget, they often can't afford to hire a securities attorney to ensure that all of their legal requirements for crowdfunding are met. This puts them at grave risk of civil and criminal penalties as well as costly delays in their business.
Prior to launching their crowdfunding campaigns, there are a series of legal documents, filings, and other requirements that business owners must complete in order to ensure they are legally compliant. Although many of the existing crowdfunding platforms offer assistance to unrepresented business owners, including business advice, they are not equipped to nor are they legally allowed to provide financial or legal advice to businesses on their platform. Therefore, it is important that businesses have their own legal representation.
Elizabeth L. Carter, Esq., LLC already provides below-market-rate legal services, as well as offers flat fees, subscription fees, and installment plans to Black and Afro-Latinx entrepreneurs in order to be accessible as possible. I have even applied for outside funding to help lower the cost of legal services on behalf of my clients. In total, I have saved my clients about $50,000 in legal fees during that time. But as a boutique law firm, the Firm can only do so much before it can no longer sustain itself. As such, I am now reaching out to our supporters and the general public to help me with this endeavor by contributing to the #BlackCapitalMatters Gift Legal Fund.
If you would like to contribute to the #BlackCapitalMatters Gift Legal Fund, you can do so from now until September 30, 2021, at www.elcesq.com/legalfund. Fund contributors who wish to receive a tax deduction can donate directly to the firm’s fiscal sponsor, the Oakland-based Sustainable Economies Law Center, at www.theselc.org/blackcapitalmatters.
Black-owned entities, including businesses, nonprofits, cooperatives, and investment funds, that are looking to raise capital in 2021-2022, and need affordable securities legal services, can also apply for the fund at www.elcesq.com/legalfund.