Bank of America More Than Doubles Its Commitment To Women- and Minority-Led VC Funds
Bank of America has more than doubled its commitment to invest in women- and minority-run venture funds as it seeks to help fuel entrepreneurship in underrepresented communities, CEO Brian Moynihan revealed in the bank’s latest annual report.
The bank said Monday it had invested $550 million in such funds, up from its initial commitment of $200 million.
The equity investments have poured into more than 150 venture funds in the Bay Area and beyond, including San Francisco-based Cake Ventures, Oakland-based Authentic Ventures and Black Operator Ventures, also based in Oakland.
“Access to capital is the biggest issue facing new businesses and entrepreneurs, and particularly business owners and entrepreneurs who come from underrepresented groups, such as people of color,” D. Steve Boland, Bank of America’s chief administrative officer, told the San Francisco Business Times. On a recent trip to San Francisco, he emphasized the bank’s efforts to finance women- and minority-owned businesses.
Last year, Bank of America also established Breakthrough Lab, an accelerator program for diverse entrepreneurs and their startups. The six-month program provides mentoring, digital expertise, networking with industry experts and access to potential investors for Black, Latino, Native American and entrepreneurs from other underrepresented communities so they can scale up their tech-related companies.
“Not only do we help them think about how they build their business plans and position themselves to attract capital, but in some cases, we’re actually connecting them to potential investors to be able to pitch their ideas,” Boland said.
A key advantage of Breakthrough Lab’s free program is that it doesn’t require that the participating startups give up equity.
Entrepreneurs participating in BofA’s Breakthrough Lab say raising capital, always a key challenge for any business, is more difficult for minority entrepreneurs.
“Emigrating from Ghana, if I’m not part of the right networks, how do I get someone to write a check?” said Evita Grant, founder and CEO of startup TecHustle, which provides financial services and payment technology so small businesses in Africa can trade globally.
“I look at the portfolio companies and what they’ve invested in, and I feel like the goalpost has shifted for me,” Grant said in recalling conversations she’s had with VCs. “Sometimes you go back to an investor who said ‘Do A and come back to me.’ You come back and say, ‘I’ve done A and B,’ and they say, ‘I’d really like to see C.’
“You go through these conversations, where you feel there are constantly moving goalposts and never someone writing the check,” said Grant, a lawyer who previously worked on intellectual property development at a major Silicon Valley law firm.
Another Bay Area startup participating in Breakthrough Lab is Inspirame, led by CEO Maria Medrano. The company’s technology, TecoGuide, is designed to help guide students through the college process so they can graduate as quickly and affordably as possible.
“I’ve seen the bias. I felt the bias, and I’ve seen what it does to perpetuate the systemic barriers that continue to exist,” said Medrano, who is of Mexican descent and a former executive at Google, Visa and Cisco.
Bank of America and other banks have long sought to serve communities that may have historically had difficulty accessing capital and credit. That effort includes BofA’s role as the largest investor in Community Development Financial Institutions, placing $2 billion of loans and investments in more than 200 of these Treasury-designated financial institutions that help promote lending in underserved communities.
“Some of these may not be loans we could make, but our (Community Development Financial Institutions) partners can make,” Boland said, adding that the bank has several arrows in its quiver to support women- and minority-owned businesses. “It’s not one silver bullet in terms of what works and will serve all of our diverse sets of clients and their needs, so we have a number of programs.
“We have a lot of partners on the ground, inside and outside the U.S., who are doing great work and capital is the need.”
