While there is no single answer, one strategy to reduce the racial wealth gap is to motivate more Black people to found technology companies in targeted market sectors.
Jeff Bussgang, a partner at Flybridge Capital Partners and professor at Harvard Business School, stresses the importance of innovation waves — emerging industries that tend to attract venture capitalists. In a presentation this fall at the Black Economic Council of Massachusetts’ (BECMA) Black Expo, Bussgang pointed out five sectors that are projected to generate over $200 trillion worth of additional value in the next decade: artificial intelligence, battery technology, blockchain technology, robotics and gene sequencing.
It’s not that there isn’t opportunity in other categories, which are expected to grow from $94 trillion to $126 trillion, but the opportunity there is smaller and increasing at a slower growth rate.
Since VCs typically do not recognize the market potential of segments that are classified as niche or culturally relevant to the Black community, we should focus on helping Black entrepreneurs found businesses in market segments that VCs do understand. If Black entrepreneurs start businesses in these sectors, they will be well-positioned to attract funding from VCs and others that have historically underinvested in Black startups. Although racial bias blinds many investors to the opportunities in Black startups, the promise in these five burgeoning market sectors is so bright, investors should be able to spot the potential even through their biased lens.
Working together, the public and private sectors can leverage these innovation waves to help reduce the racial wealth gap. For example, city and state grants could help Black entrepreneurs start businesses in these sectors as part of an economic development strategy. Similarly, local and state governments could offer incentives to encourage Black-founded companies in these sectors to move to Massachusetts and to entice Immigrant Investor Program (EB-5) applicants to start businesses in locales such as Roxbury and Dorchester. Another approach would be to offer visas to international students of color who agree to stay in the greater Boston area after graduation to start companies in targeted sectors.
We should also ensure that our local public schools have the resources they need to prepare students for careers in promising fields. Resources such as robotics labs, maker spaces and advanced manufacturing equipment for biomanufacturing will offer students hands-on experience in new technologies. These resources are critical for schools along the Roxbury education corridor, including Roxbury Community College, Madison Park High School, Dearborn STEM Academy, and Benjamin Franklin Cummings Institute of Technology.
Instead, we need to provide vocational training for jobs in the innovation wave sectors. Boston has several college-behind-bars programs that could focus on these fields, and since many jobs in these fields can be done remotely, students could start work while incarcerated and already have jobs upon release. Jobs that can be done remotely are ideal for those with criminal records.
Bussgang emphasizes that Boston already has the businesses of the future, the colleges and universities to seed them, and over $120 billion of VC capital under management. Now is the time to take action that will enable us to funnel a significant portion of the projected $200 trillion value increase toward reducing the racial wealth gap in the greater Boston area and throughout Massachusetts.
Ed Gaskin is executive director of the economic development organization Greater Grove Hall Main Streets.