Title

Crowdfunding, Cryptocurrency, and Capital: Alternative Sources of Business Capital for Black Entrepreneurs

Document Type

Article

Publication Date

1-1-2019

Publication Title

Congressional Black Caucus Foundation-Center for Policy Analysis and Research

Publisher

Center for Policy Analysis and Research

First page number:

1

Last page number:

9

Abstract

Having access to capital is essential to the success of every business, and its ability to keep pace with its competitors. Historically, banks have featured prominently as the primary lender to businesses. Bank investors provide new businesses with startup capital, and support established businesses with capital to grow and expand their companies (2).

According to a study by the U.S. Department of Commerce Minority Business Development Agency, (3) black owned businesses continue to encounter barriers when it comes to accessing capital. Internal and external factors have been cited, but three causes have been highlighted as the key obstacles: 1) the credit worthiness of black-owned business owners; 2) institutional racism and discrimination; and 3) the lack of social capital and relational networks. (4)

Despite these impediments, technological innovation now offers black entrepreneurs more opportunities than ever before to attract investors. Crowdfunding and crowdsourcing platforms, such as Kickstarter, Fundable, GoFundMe, Indiegogo and AngelList are now viable alternatives for black owned businesses to pursue in order to raise startup funds. Similarly, cryptocurrency, such as Bitcoin, has expanded investment opportunities for African American entrepreneurs by allowing international entities to invest in U.S. based companies. This policy brief examines the traditional barriers that African American businesses encounter when seeking access to business capital, and how black entrepreneurs can use innovations in technology to overcome these barriers, and start and grow their businesses.

Disciplines

Business | Entrepreneurial and Small Business Operations

Language

English


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