Getting venture capital is never easy. But getting venture capital when you have a minority-owned business? That presents a whole new set of challenges, according to James Moore, managing director of Emerging Venture Network (EVN), a nonprofit organization formed to help connect minority entrepreneurs with funding sources.
The biggest obstacles facing minority entrepreneurs, says Moore, are access and experience. "[VCs] get [about] 100 business plans a month-and the ones they look at come from people they know," he says. Unless you're in that network-part of a VC's Harvard class or a member of one of the associations he belongs to-the VC probably won't look at your plan.
Moore knows the process well-he searched for funding for his own company in the mid-1990s. He came into the game with a lot of connections, but he lacked experience. He recalls going to about 150 meetings over a year, eventually realizing that only a few VCs were keen on investing. "I spent 80 percent of my time talking to the wrong people," says Moore. EVN was formed to help entrepreneurs clear those hurdles by educating business owners about seeking capital and referring them to a network of VCs ready to invest in minority-led businesses.
Alan J. Taetle, a general partner at Noro-Moseley Partners, an Atlanta venture capital firm, notes it's still tough for all businesses seeking venture capital-not just minority-run companies. Like most VCs, Taetle looks for proprietors who've bootstrapped themselves into success. In other words, be prepared to spend all your own money to have something concrete to show a VC before he'll bite.
While minorities continue to have a hard time-receiving just 2 to 3 percent of investment money, according to some estimates-Taetle sees a light at the end of the tunnel. "I think it will improve," he says. "I know it will."
When more minority firms are introduced to VCs, it will result in more of those companies being funded, he predicts. He's already seen improvements in the quality of presentations from companies that have been educated under EVN's guidance. In fact, Noro-Moseley recently invested in four minority-run businesses.
It's not easy out there, but some folks are trying to make it better. For instance, the Minority Business Development Agency (MBDA) recently worked with EVN to launch the MBDA Equity Capital Access program, which offers equity capital training as well as a business plan competition with an equity "boot camp" for winners. Visit www.mbda.gov or www.evn.org for more information.
- Noro-Moseley Partners
(404) 233-1966, www.noro-moseley.com