How new equity crowdfunding rules will benefit black entrepreneurs

According to a 2006 study, African-Americans are 79% more likely to be interested in entrepreneurship than whites. Yet African-American–owned businesses have lower annual revenues, profits, and payrolls and fail at higher rates than white-owned businesses. The Securities and Exchange Commission (SEC) recently passed new rules on equity crowdfunding that have the potential to change all that.

According to the Minority Business Development Agency (MBDA), there are 1.9 million African-American–owned firms in the United States that annually contribute $136 billion and 910,000 jobs to the American economy. The ranks of those companies have grown dramatically over the past decade, with black business ownership growing at roughly triple the national rate of new firms created between 2002 and 2007.

Yet African-American–owned businesses still lag far behind white-owned businesses in the U.S. The former have average annual revenues of only $72,000, compared with $490,000 for non-minority–owned companies. With lower sales, African-American–owned firms likewise pay their employees less; employees at the average minority-owned firm earn an annual salary of roughly $26,000, compared to $29,842 at non-minority employers. And as of 2007, the latest year for which data are available, just 6% of black-owned businesses were even large enough to have employees in the first place. (Fast Company)

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