Startup Loans To Black Entrepreneurs To ‘Interject Some Balance In Capitalism’

Source: San Francisco Chronicle, Carolyn Said
Photo: Chew prepares a plant-based chicken melt sandwich at the Veg Hub. “That money was a blessing,” he says of his $20,000 loan from the Runway Project. (Jessica Christian, The Chronicle)

Chew needed financial backing to get Something Better off the ground. That’s where Oakland’s Runway Project stepped in and lent him $20,000.

“That money was a blessing,” he said. It helped him land a manufacturing site in Vallejo. Runway also helped with advice, coaching him on his business and marketing plans. He’s now raising more money to prepare for a distribution deal he landed with Whole Foods for next year.

Runway offers loans and other support to help black entrepreneurs start businesses. Many startups tap friends and family for early money, but minorities often don’t have well-heeled personal or professional networks. While the median net worth of white households is $171,000, that of black households is $17,200, according to the Federal Reserve.

The racial wealth disparity “is a big gap,” said Claudia Viek, founder of the Invest in Women Entrepreneurs Initiative, a nonprofit that is not affiliated with Runway. “Providing that early-stage, more-patient capital meets an acute need. It’s a way to interject some balance in capitalism.”

Runway founder Jessica Norwood calls the loans “believe-in-you money” but hastens to add: “It’s more than the money part. This is a story about what it means to be friends and family to one another, to be in deep community with each other. This is saying to folks who have been chugging away that we believe in them.”

The enterprises funded aren’t pitching the next big tech thing. Instead they’re Main Street stalwarts with products such as floral arrangements, fashion accessories, apparel, artisan juice, handmade pies and skin care creams.

Runway’s approach sounds terrific, said Ben Mangan, executive director of the Center for Social Sector Leadership at UC Berkeley’s Haas School of Business, who has no ties to Runway.

“There’s a huge need for this kind of capital, and it’s almost impossible to find it,” he said. “We have a massive problem to solve when it comes to creating wealth for people who have a disproportionately small share. We need every smart, viable experiment we get.”

Runway is small. It’s made 13 loans over the past year — and so far has a 100 percent repayment rate. But it has big ambitions to spread nationwide, and is currently raising money and developing a model for that.

https://www.sfchronicle.com/business/article/Startup-loans-to-black-entrepreneurs