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The disparities in venture funding to Black and other minority-founded businesses in the U.S. are well-documented. Perhaps even more troubling is a parallel problem playing out in the traditional small-business world, which has been hardest-hit by the economic effects of the COVID-19 pandemic.

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A recent national reporting project by American City Business Journals found that The number of Small Business Administration-backed loans to Black-owned businesses fell by 84 percent since peaking before the 2008 financial crisis, the report found, based on data obtained from the agency. That dramatic decrease came despite a decade-long economic boom, a massive increase in bank deposits and an 82 percent increase in commercial loans overall.聽

Last year, just 3 percent of the loan dollars in the SBA鈥檚 flagship 7(a) loan program went to Black-owned businesses, although about 9.5 percent of U.S. small businesses are Black-owned.聽

As 附近上门 , the figures are equally dismal on the venture side of funding: Just 2.6 percent of U.S. VC dollars in 2020 have gone to Black- or Latino-owned businesses, for example.

Unequal access to capital is playing out in real time as the economic effects of the pandemic take their toll. According to a Stanford University study cited in the Business Journals’ reporting, an astonishing 41 percent of Black-owned businesses in the U.S. have ceased operating since April. Among white-owned businesses, that figure is 17 percent.

鈥淚 don鈥檛 think most Americans understand the severity of the problem,鈥� Orv Kimbrough, CEO of Midwest BankCentre, a community bank in St. Louis, told the Business Journal. 鈥淚 call it corporate redlining.鈥�

Our top-read stories

Among 附近上门 News readers鈥� favorite stories last week:

• The abrupt shutdown of , the short-form mobile video platform that launched just six months ago, drew significant reader interest. The company, founded by film producer and former Disney exec Jeffrey Katzenberg and led by former Hewlett-Packard and eBay CEO Meg Whitman, had raised an astonishing $1.75 billion from investors.
• Christine Hall looked at how the fintech sector is trending back to bundling services together. As we鈥檙e seeing with the pending acquisitions of fintech unicorns like and , while the trend a few years ago was launching as 鈥渂est of breed鈥� standalone services, fintechs are now rebundling as one-stop shops or being acquired by incumbent financial giants.
• Special purpose acquisition companies, or SPACs, are profoundly reshaping the IPO market, Joanna Glasner writes, by opening the door to the kinds of companies that in recent years have not been tapping public markets.

What I’m reading

As I wrote last week, there鈥檚 a lot for startup entrepreneurs and investors to be concerned about in the Congressional antitrust report released earlier this month. Business Insider reports that is the report鈥檚 recommendation that all acquisitions by Big Tech companies be 鈥減resumed anticompetitive unless the merging parties could show that the transaction was necessary for serving the public interest.鈥�

The report presumes that such acquisitions are fundamentally nefarious and requires that the acquirer show 鈥渢hat similar benefits could not be achieved through internal growth and expansion.鈥澛�

Certainly, the dominance of the largest players in the market influences which types of startups get funding and traction. 附近上门 News reporter Joanna Glasner last week went looking to see how many startups in the search space are getting funding, and her list came up pretty short. Given that, 鈥渋t鈥檚 hard to argue that 鈥檚 overwhelming market share, combined with its willingness to spend on in-house innovation to maintain and expand its search dominance, aren鈥檛 having any effect,鈥� she writes. 鈥淎t the very least, U.S. startups aren鈥檛 positioning themselves to become 鈥榯he next Google.鈥� 鈥�

Even so, the idea that every potential acquisition has to pass a litmus test feels like a 鈥済uilty until proven innocent鈥� approach that angel investor said 鈥渇eels inconsistent with basic American principles.”聽

“Many founders start companies with the dream of selling them, and this dream has fueled innovation and investment for decades,” he pointed out when earlier this month.

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