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After the Black Lives Matter movement gained international attention a year ago, the Oakland Black Business Fund launched an ambitious plan to raise venture funding for the Black economy in the Bay Area and across the nation.
It hasnt succeeded in raising the full amount of the fund so far, but the group has made progress in finding Bay Area companies and financial institutions to support Black-owned businesses. Those partners include the Community Bank of the Bay, Clover, Fiserv, Square, Target, and Xero. The group is offering customized programs to boost the Black economy and help small businesses get off the ground and is already making a difference.
In addition to donating to OBBFs grant program, each partner has committed to offering services to OBBFs portfolio of Black-owned businesses. Oakland Black Business Fund redefines capital deployment systems to create possibilities for Black economic growth that defy the confines of systemic racism. The fund supports Black businesses with capital and technical assistance to elevate Black entrepreneurs as thriving leaders in the local economy.
We have progress in having both grown the overall reputation and reach of what weve been able to do in terms of funding different businesses, OBBF cofounder Trevor Parham told VentureBeat in an interview. We are starting to demonstrate the value of what these corporate partnerships can do for the recipient businesses, in terms of the actual services that theyre getting. Now were able to get more accounts on our roster to serve more groups simultaneously.
As part of OBBFs Corporate Partnership Program, corporations have developed programs to engage directly with OBBF grant recipients. Community Bank of the Bay is working closely with grantees to secure PPP loans from the federal government, while Fiserv and Clover are providing additional funding, business expertise, and technology solutions as part of their Back2Business support program.
In addition to hosting a pop-up program on the retail floor of its office in downtown Oakland, Square has created an affiliate program that allows OBBF grantees to process up to $3,000 in transactions without any processing fees. Xero is connecting grant recipients with local Black accountants to set up bookkeeping infrastructure using Xeros software, and Targets HandsOn program provides select grantees with up to 200 hours of pro bono consulting support from Target employees over a 12-week period.
Michael Jones, a leader of a Black employee group at Xero, is based in New York. He said in an interview that he and a counterpart in the Bay Area met with Parham to talk about the OBBF just as they were at the very beginning stages of internally grappling with George Floyds death.
As a result of that, the group of Black employees within Xero decided to form a support group for each other, which they dubbed Black Xero. And they decided to support the OBBF with help from their network of Black accounting professionals.
We saw this as a way to cultivate Black entrepreneurs and business owners and match them with Black accounting professionals wherever possible, Jones said. We have created an offer where any business owner working with OBBF can sign up for one of our subscriptions and get a steep discount for six months.
Founded in June 2020 by Oakland community leaders Elisse Douglass and Parham, OBBF has since raised more than $500,000 via individual contributions and corporate partnerships. OBBF will continue to use these funds to support Black-owned businesses and entrepreneurs in the Bay Area and address systemic bias from traditional financial organizations that perpetuate the funding gap for Black businesses. To date, OBBF has boosted more than 95 businesses, and it aims to support a total of 250 before the end of the year.
The group has helped Kyrah Ayers, co-owner of Queen Hippie Gypsy, Oaklands first Black-owned artisan botanica. He said in a statement that Square has provided help since the beginning and OBBF has helped his company start its ecommerce business on Squares platform, while the Community Bank of the Bay has helped set the business up for greater financial security. Ayers also plans to tap Xeros network of accountants to optimize bookkeeping.
There are always ideas you start with and then what you can do in practice in comparison with the theory, Parham said. Initially, we wanted to have tons of money and serve lots of people. But I think now were focused and have seen the value of quality over quantity. And with that quality, we are providing multiple touchpoints with one business. I think theres actually more to be said for that than just cutting a check for several businesses and then they all walk away and we wish them well.
OBBF has also helped Isis Asare, founder and CEO at Sistah Scifi, the first Black-owned online bookstore focused on science fiction and fantasy. She started the business in her spare time two years ago.
Asare will be working with Targets team to implement a comprehensive financial dashboard to help understand her business success and access all of the information she needs when meeting with potential investors.
Asare found the OBBF through social media in March.
It was a great response to small businesses, responding to the pandemic and managing in defiance and reacting to this outcry around the police brutality and George Floyd, she said in an interview. It can be sympathetic and empathetic but actually empowered and energized to help businesses.
She made a $100 donation, and then the group encouraged her to apply.
That was exciting, as I felt there were resources behind it, she said. It turned out there was this amazing network of small businesses.
Asare has no plans for a brick-and-mortar store, but she does want to have a nationwide network of automated vending kiosks in Black-owned coffee shops across the country. She is using the working space at OBBFs partner office at Oak Stop.
Before I was at Oak Stop, I was fulfilling orders from my apartment. And then as it grew, that just became a lot, she said. And then I wanted to hire somebody, but it was overhead. So it made sense to have some space.
The business has grown. She has 8,500 Instagram followers, 5,300 Facebook followers, and an email list of about 3,000. Thanks to the OBBF, she will get some help from Target on financial reporting, business analytics, and metrics.
The Sistah Scifi is a great example of how weve had multiple touchpoints with Isis as a business, and that elevates her profile and the impact we are having, Parham said. One business is able to show that theyre part of something. Theyre part of an ecosystem or program that continues to return resources to them, versus simply saying, I needed a check.’
Asare said this June could be her biggest sales month ever.
Historically, Black-owned businesses have been disproportionately impacted by lending bias and a lack of community support. Black business owners experience increased scrutiny when applying for business loans, and the average level of startup capital among Black entrepreneurs is $35,205, compared with $106,720 for white entrepreneurs.
OBBF is the only Black-led fund providing business grants and technical assistance from other local Black business owners to address this historical lack of access to capital and resources for growth. Its unique approach to building peer-to-peer relationships between Black business owners, Black technical assistance providers, technology companies, and financial institutions offers a sustainable growth model for underfunded businesses.
Parham plans to create a $10 million fund to invest in Black businesses in Oakland, and he wants to eventually build up to a $1 billion fund to invest across the nation.
OBBF supports a broad array of businesses and nonprofits, with a focus on scaling its city-specific model to other municipalities across the country. The fund is seeking investors and corporate partners to bridge the gap to their next milestone of $1 million raised by the end of 2021.
Businesses interested in receiving capital or technical support can apply directly here. Investors or organizations interested in contributing to OBBF can contact firstname.lastname@example.org for more information on partnership opportunities.
Parham wants to be able to put capital to work and give businesses the resources they need to expand. We are trying to push that justice agenda with these businesses, he said.
The venture fund is a long-term goal.
The idea really is to be able to use this work that were doing now, the grant-making level, as essentially a lab to explore and test what types of businesses can we connect to and build relationships with, Parham said. Then you have to understand the business models that they have to then figure out, and then we would have to design an investment instrument thats going to be compatible with these businesses.
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