Reports

An Economy for All

With support from JP Morgan Chase & Co., the New Venture Fund’s Harriet Ecosystem Initiative partnered with Arabella Advisors to produce ‘An Economy for All,’ a report which explores race- and gender-based inequalities in entrepreneurial funding and which proposes ways for philanthropy to use the power of impact investing to unlock capital for these entrepreneurs.

An Economy for All maps the types of capital that women entrepreneurs and entrepreneurs of color are accessing and the intermediaries that are—or could be—supporting them. It also aims to assess the barriers these entrepreneurs face when accessing capital markets, and to identify ways that philanthropists can increase their access to capital.

Arabella Advisors conducted interviews with a diverse set of experts and stakeholders, including philanthropists, impact investors, community development financial institutions (CDFIs), accelerators, academics, incubators, venture capital (VC) firms, and entrepreneurs. We also reviewed academic publications, articles, and market research.

In the report, we analyze two types of businesses: high-growth startups, which are typically backed by angel investors, accelerators, and venture capital firms; and small and medium-sized businesses, which usually take out loans from banks and CDFIs to sustain their operations. Arabella’s research found that women and people of color who lead both types of businesses face various challenges in accessing sources of investment capital. Knocking down these barriers requires both systemic change and near-term action, which can be addressed by philanthropy and impact investing.

Among the findings of the report: While women represent over half of the country’s population, only 19.4% of businesses were owned by women, and while people of color represent 38% of the US, just 17.5% of businesses were owned by people of color. Despite these statistics, 72.3% of new jobs in the US were created by non-white business owners between 2007 and 2012, and women-owned businesses created 1.24 million more jobs than male-owned firms.

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