is helping close
the racial wealth
gap by raising
capital for black
Jessica Norwood is the founder of the Runway Project. She is also the executive director of the Emerging ChangeMakers Network, an organization dedicated to working with inspiring leaders and innovative ideas that end economic inequality. As a leading social entrepreneur in her region, she supports strengthening social enterprise and social investing as a way to build community resiliency. Jessica previously spent years in Washington, D.C., and elsewhere, as a political fundraiser and consultant, raising millions of dollars for various campaigns.
Exploring the persistent racial wealth gap as a fellow with the Nathan Cummings Foundation, she zeroed in on the reasons for low rates of business startups among African-Americans. Chief among them: a lack of the kind of early “friends and family” capital that is key to getting such businesses off the ground. A typical business needs about $30,000 to get off the ground; average black household wealth is about $11,000. In 2016, Norwood set out to raise a fund to fill the friends-and-family gap. The Runway Project initially aimed to raise $300,000; Norwood quickly attracted $1 million, primarily through a certificate of deposit at Self Help Credit Union.
In the past year, the project has deployed $175,000 to fund nine entrepreneurs in Oakland and is on a pace to back two more each month. The enterprises range from a locally-sourced floral business to skin- and hair care products to restaurants and food delivery. The average five-year, 4% loan is $23,000 and requires interest-only payments for the first two years. Norwood calls it “believe in you money.”
The loans are structured as personal loans for business purposes and require no collateral, thanks to a collateral fund backed by RSF Social Finance. The Runway Project helps the entrepreneurs with their business plans and pitches; the first group of businesses have already raised an additional $100,000, she says. “We’re not just putting loans out. We’re trying to support and connect that ecosystem to wrap around the entrepreneurs.”
Norwood is now setting her sights on a $10 million fund to expand The Runway Project to three or more additional cities (about $2 million will be available as follow-on funding for the Oakland-area borrowers). The larger fund will allow Runway to raise capital from more diverse sources, beyond the low-interest (though federally insured) certificates of deposit. For its portfolio companies, Runway is looking at alternatives to traditional equity term sheets, including a variety of revenue-share structures.
Jessica is a past member of the board of directors for the Highlander Research and Education Center, a former Emerging Leaders Fellow at the Sanford School of Public Policy at Duke University, and the Political Power Fellow with the Hip Hop Archive at the Du Bois Institute at Harvard University.
Source: http://therunwayproject.org and ImpactAlpha
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