The New Jersey Economic Development Authority (NJEDA) today released a request for information (RFI) seeking insights into the obstacles and disparities Black- and Latinx-led start-ups in New Jersey face as well as suggested measures that could address these inequalities. One potential solution the NJEDA is considering is a diversity seed fund that would focus on driving capital to Black- and Latinx-owned enterprises.
“Diversity is one of New Jersey’s greatest strengths, and it is time that our start-up sector reflects that,” said Governor Phil Murphy. “The information we receive through this RFI will be critical to understanding Black and Latino entrepreneurs’ needs and to ensuring we craft effective tools to move us toward our goal of building the most diverse, inclusive innovation ecosystem in the nation.”
Supporting small business and enhancing access to capital for Black- and Latinx-owned businesses are central pillars of Governor Murphy’s comprehensive Economic Development Plan, The State of Innovation, Building a Stronger and Fairer Economy in New Jersey. This is critical because, according to a recent survey by Diversity VC and Rate My Investor, nationwide less than one percent of all venture capital investments go to Black-owned firms and less than two percent of investments go to Latinx-owned companies. This not only deprives members of these populations of opportunity, but also creates massive opportunity costs by depriving economies and industries of the wide array of perspectives and experiences members of underserved populations could contribute.
“Under Governor Murphy’s leadership, New Jersey is reclaiming its historic leadership position in innovation – but we want to be more than just the most innovative state, we want to have the most diverse and inclusive innovation ecosystem in America,” said NJEDA Chief Executive Officer Tim Sullivan. “For too long, Black and Latinx entrepreneurs have been denied access to the early-stage seed capital that can help propel a business from vision to reality. With this request for information we are taking the first concrete steps to providing more capital to a broader array of New Jersey visionaries.”
The RFI released today will help the NJEDA fully understand the scope and characteristics of the challenges Black and Latinx business owners and entrepreneurs face when attempting to access public and private capital. It is also an opportunity for stakeholders to provide input that the Authority will use to craft solutions that meet investors’ and entrepreneurs’ needs. One solution the NJEDA is considering is a diversity seed fund that would make additional resources available for Black- and Latinx-owned companies.
“Proactively seeking feedback from Black and Latinx entrepreneurs is critical to ensuring that this effort will result in meaningful change,” said Lieutenant Governor Sheila Y. Oliver, who also serves as Commissioner of the Department of Community Affairs. “The NJEDA’s willingness to listen and learn from financial and business experts is an important step in helping to drive funding to innovative, high-growth companies in our underserved communities.”
The goal of the RFI is to gather information on structural obstacles and also on solutions, such as strategies to attract existing funds or the creation of a new fund. The RFI seeks input from a diverse range of stakeholders, including fund managers, angel investors, venture capitalists, small-business owners, researchers and practitioners involved in entrepreneurship work, industry and trade groups, and other state governments. Questions included in the RFI address Black and Latinx businesses’ needs and solicit suggestions for how to best structure solutions, including attracting existing seed funds to New Jersey or creating a new seed fund with a specific focus on such businesses.
“It is important that we let the communities we want to help take the lead on identifying the problems they face and suggesting solutions that will work for them,” said New Jersey Chief Diversity Officer Hester Agudosi. “This RFI is an important step in the right direction that will help New Jersey craft solutions that address both the surface-level challenges Black and Latinx entrepreneurs face and the deeper, systemic barriers that prevent them from accessing capital.”
The RFI is available here: https://www.njeda.com/Bidding-Opportunities-General/Economic-Transformation-RFIs
All questions concerning this RFI must be submitted in writing no later than 11:59 PM EST on March 27, 2020 to RFI-ExpandingSeedCapital@njeda.com. The subject of the email should read: “Questions-2020-RFI-099: Expanding Seed Capital to Black and Latinx Entrepreneurs.” Answers to these questions will be publicly posted on the Authority’s website on or about April 7, 2020.
RFI responses must be submitted in writing no later than 11:59 PM EST on April 23, 2020 to RFI-ExpandingSeedCapital@njeda.com. The subject line of the email should read “RFI Response-2020-RFI-099: Expanding Seed Capital to Black and Latinx Entrepreneurs.”
To read Governor Murphy’s full economic plan, please visit: https://nj.gov/economicplan
About the New Jersey Economic Development Authority
The New Jersey Economic Development Authority (NJEDA) serves as the State’s principal agency for driving economic growth. The NJEDA is committed to making New Jersey a national model for inclusive and sustainable economic development by focusing on key strategies to help build strong and dynamic communities, create good jobs for New Jersey residents, and provide pathways to a stronger and fairer economy.