For the first time ever, a U.S. state is developing a fund strictly dedicated to supporting Black and Latinx-led companies.
An exclusive from TechCrunch reports that New Jersey Governor Phil Murphy announced this week a proposal to direct funds from the state budget to form a $10 million seed fund for Black and Latinx startups.
Based on research conducted by New Jersey, The Black and Latinx Seed Fund is the first-of-its-kind for any state in the nation and will be administered by the New Jersey Economic Development Authority (NJEDA).
NJEDA CEO Tim Sullivan told TechCrunch that the new development is a “direct response to the systemic racial inequities in access to capital for Black and brown entrepreneurs” and aims to provide a solution for “the racial wealth gap.”
“I think two of the centerpieces of Gov. Murphy’s strategy overall for the economy is to build a stronger and fairer New Jersey and a stronger and fairer economy,” Sullivan added.
He also shares that the new seed fund is an attempt at “reclaiming New Jersey’s heritage of leadership, innovation and entrepreneurship.”
It’s widely-known that Black and Latinx founders struggle to earn access to venture dollars to help support their companies. Research conducted by Crunchbase last year found that by the end of August Black and Latinx founders had only raised $2.3 billion in funding — making up 2.6% of the total $87.3 billion in funding that had been allocated to all founders up until then in 2020.
We’ve witnessed venture funds increasing their focus toward more initiatives catered to Black and brown founders in the wake of the Black Lives Matter movement in 2020, but now New Jersey is the first state as a whole to get in on the action.
According to Zakiya Smith Ellis — chief policy advisor to Gov. Murphy — she claims that the state’s new initiative arrives following conversations with Black and Latinx business investors.
“This was developed with the input of folks who might be direct beneficiaries of this program and that community was directly impactful in designing and developing this proposal,” Smith Ellis told TechCrunch. “We hear from them ‘we don’t have the family members, we don’t have the friends who are just going to write me a check at the very beginning, I think this is really instructive.’ ”
With the new seed fund, the state — under Gov. Murphy’s guidance — aims “to build the most diverse and inclusive innovation ecosystem in America.”
The legislature for the state is scheduled to vote on the proposal by July 1.