Minorities and Venture Capital: A New Wave in American Business

Minorities and Venture Capital: A New Wave in American Business

Last year, the Ewing Marion Kauffman Foundation sponsored a report that shows minorities, especially African Americans, are 50 percent more likely than any other group to engage in business start-up activities. Following up on The Entrepreneur Next Door (54 pages, PDF), the foundation's entrepreneurship program recently released a new report that examines venture capital funds that make significant investments in minority business enterprises. Minorities and Venture Capital: A New Wave in American Business (16 pages, PDF), by Timothy Bates of Wayne State University and William Bradford of the University of Washington, reveals that investments in minority businesses produce returns comparable to — if not slightly higher than — traditional investments by mainstream capitalists. The report also reveals that minority-oriented funds weathered the stock market slump relatively well compared with the overall venture capital industry, which had invested heavily in high-tech businesses.