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When customers at Silicon Valley Bank Rushed to withdraw billions of dollars last month, the risk capital Arlan Hamilton intervened to help some of the founders of Color who panicked to lose access to the payroll funds.
As a black woman with almost 10 years of business experience, Hamilton knew that the options for these startup founders were limited.
SVB had the reputation of serving people of under-represented communities like its own. Its failure has rekindled the concerns of industry experts concerning loans to discrimination in the banking sector and the disparities resulting in capital for people of color.
Hamilton, the 43 -year -old founder and Backstage Capital Director, said that as far as colored entrepreneurs are concerned, “we are already in the small house. We already have the swinging door and thinner walls.
Created in 1983, the lender of medium -sized California technology was the 16th largest American bank at the end of 2022 before He collapsed on March 10. SVB has provided banking services to almost half of all technology and life science companies supported by companies in the United States.
Hamilton, industry experts and other investors told CNN that the bank was determined to promote a community of minority entrepreneurs and provided them with social and financial capital.
SVB has regularly sponsored conferences and networking events for minority entrepreneurs, said Hamilton, and he was well known to finance the Black company state report Facked by BLK VC, a non -profit organization that connects and empowers black investors.
“When other banks said no, SVB would say yes,” said Joynicole Martinez, a 25 -year -old entrepreneur and head of advancement and innovation for Rising Tide Capital, a non -profit organization founded in 2004 to link entrepreneurs to investors and mentors.
Martinez is also an official member of the Forbes Coaches Council, an organization only for commercial and career coaches. She said SVB was an invaluable resource for colored entrepreneurs and offered their customers Technical tools at reduced price and research funding.
Many women and people say they are refused
The owners of minority companies have long been faced with challenges to capital access due to discriminatory loan practices, according to experts. Data from Credit survey for small businessesA collaboration of the 12 banks of the Federal Reserve, shows disparities on denial rates for banking and non -banking loans.
In 2021, around 16% of companies led by blacks acquired the total amount of financing of companies they have sought from banks, compared to 35% of companies belonging to whites, according to the survey.
“We know that there is a historical, systemic and just blatant racism which is inherent in loans and banking services. We must start there and not for the tip,” Martinez told CNN.
Asya Bradley is an immigrant founder of several technological companies like Kinley, a financial service company, aimed at helping black Americans build generational wealth. After the collapse of SVB, Bradley said that she had joined a WhatsApp group of more than 1,000 founders of immigrants. Group members quickly mobilized to support each other, she said.
The founders of immigrants often have no social security numbers or permanent addresses in the United States, said Bradley, and it was crucial to think about different ways to find funding in a system that does not recognize them.
“The community was really special because many of these people shared different things they had done to succeed in terms of obtaining accounts in different places. They were also able to share different regional banks that have risen and were like, “ hey, if you have accounts at SVB, we can help you guys ”, said Bradley.
Many women, people of color and immigrants opt for community or regional banks like SVB, known as Bradley, because they are often rejected from the “first four banks” – Jpmorgan Chase, Bank of America, Wells Fargo and Citibank.
In his case, Bradley said her sex could have been a problem when she could only open a commercial account in one of the “first four banks” when her brother co-signed for her.
“The first four do not want our business. The first four regularly reject us. The first four do not give us the service that we deserve. And that is why we went to community banks and regional banks such as SVB,” said Bradley.
None of the first four banks made a comment to CNN. The Financial Services Forum, an organization representing the eight largest financial institutions in the United States, said that banks have committed millions of dollars since 2020 to deal with economic and racial inequalities.
Last week, JPMORGAN CHASE PDG Jamie Dimon Poppy Harlow of CNN said that its bank held 30% of its branches in low -income neighborhoods in a commitment of $ 30 billion towards black and brown communities across the country.
Wells Fargo specifically underlined its report on diversity, equity and inclusion in 2022, which examines the recent bank initiatives to reach poorly served communities.
The bank has teamed up last year with the Black Economic Alliance to launch the Black Entrepreneur Fund – a seed of $ 50 million, a startup and a capital fund at an early stage for companies founded or led by black and African -American entrepreneurs. And since May 2021, Wells Fargo has invested in 13 minority deposit institutions, making its $ 50 million commitment to support banks belonging to blacks.
Banks belonging to blacks strive to fill the loan gap and promote economic empowerment in these traditionally excluded communities, but their number has decreased over the years, and they have much less active at their disposal than the main banks.
Oneunited Bank, the largest bank belonging to blacks in the United States, manages just over $ 650 million in assets. In comparison, JPMorgan Chase manages 3.7 billions of dollars in assets.
Due to these disparities, entrepreneurs are also looking for funding from venture capital. In the early 2010s, Hamilton intended to start his own technological business – but by looking for investors, she saw that white men would control almost all dollars in venture capital. This experience led him to establish Backstage Capital, a venture capital fund which invests in new companies led by under-represented founders.
“I said:” Well, instead of trying to collect funds for a company, allow me to try to collect a venture capital fund which will invest in under-represented founders-and now we call them underestimated-founders who are women, people of color and LGBTQ specifically “because I am all three,” said Hamilton to CNN.
Since then, Backstage Capital has accumulated a portfolio of nearly 150 different companies and has made more than 120 investments in diversity, according to Crunchbase data.
But Bradley, who is also a “ providential investor ” of companies belonging to minorities, said that it remained “really full of hope” that community banks, regional banks and financial technologies “will all stand up and say:” Hey, we are not going to leave the good job of SVB. »»
