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Goldman Sachs Foundation President Asahi Pompey: Black businesses are over-mentored and under capitalized

Goldman Sachs Foundation President Asahi Pompey discusses ways to get more capital to minority-owned businesses.

Video Transcript

ASAHI POMPEY: This data is very, very sobering. As you know, we've been working with small businesses for over a decade now. And we now have a network of 9,700 small businesses. These are growth oriented employer firms, real job creators. And over the last several months, as we tapped into this data, it's really laid bare the pandemic within the pandemic, which is racial disparities that's bearing out in the small business sector.

As you said, you know, Black business owners having three times the rejection rate as their white counterparts. And in terms of solutions, as you asked, you know, we think a number of things are really needed. The first is greater access to capital. There is a misallocation of capital, and we've got to change that.

If you ask a Black business owner, you know, what do they need, 66% of the Black businesses that participate in 10,000 Small Businesses said their number one concern was greater access to capital. Now, when you juxtapose that with white businesses, 33% of white businesses said that capital was their number one concern, in fact. Some of them ranked mentorship, sponsorship, labor concerns as higher on the list than access to capital. So we've got to start by fixing this misallocation of capital.

JULIE HYMAN: And so how do you go about doing that? I mean, I know part of what you all do is give tools, both in the form of capital, but also in education, to these business owners. But one would think you have to address the other side of the equation as well. That is, that access to capital, the people who hold the purse strings, and getting them to try to eliminate some of that systemic bias that is-- looks like it's at work there.

ASAHI POMPEY: Yeah, and one of the key strategies that we've employed is really funding CDFIs. And year to date, we've made a $750 million commitment to fund CDFIs. And these are the last [INAUDIBLE] lenders to communities that frequently don't have any banking relationship we have a fabulous woman-- Black woman entrepreneur in Detroit Carla Walker Miller. And she likes to say, you know, the worst time to meet a banker is when you need money.

And what she means by that is if you don't have that established relationship with a banker in an organization, it becomes very, very difficult for a Black business owner to get funding. She said she feels like the "no" is teed up before she walks in the door. And so really I think funding CDFIs is one of them.

The other thing that we have to do is really fund Black founders, Latino founders, women founders. And we launched last year our launch with Goldman Sachs effort, which is a $500 million for-profit balance sheet investment in diverse portfolio managers and diverse companies. So those are some of the ways in which we have to really move the needle.