The mis-education of black investors

The power of Equity Crowdfunding

When Carter G. Woodson launched Negro History Week (the precursor to Black History Month) in 1926, he said celebration is important because African American contributions "were overlooked, ignored, and even suppressed by the writers of history textbooks and the teachers who use them."

The African Diaspora (the global community of people who trace their roots to the Continent of Africa) has activated ideas and funded dreams through crowdfunding for generations and continue the practice today. Crowdsourced ideas seeded libraries, Sous Sous groups provided funding, and rent parties kept communities housed. Modern-day crowdfunding platforms like Republic provide access to capital and wealth-building opportunities that break socio-economic barriers and fund dreams.

Sou Sou

When President Barack Obama signed the Jumpstart Our Business Startups Act (JOBS Act) into law, enabling equity crowdfunding in the United States for the first time, he was connecting to his roots on the Continent of Africa. Sou Sou are informal financing groups that pool resources for community members who need access to capital. Each member of the Sou Sou makes a standard payment to the fund. Disbursements are made to members of the Sou Sou at regular intervals, often monthly. The beneficiary rotates until everyone in the group has received a disbursement. 

(Ghanaian Cedi. Image: Bank of Ghana) 

Beginning in West African nations like Ghana and Nigeria, Sou Sou have spread with the Global Diaspora to the Caribbean, United States, and other nations. Funds have been used to pay bills, make major purchases, or open new businesses like the local barbershops that benefit from theCut. 

This kind of peer-to-peer service is an early example of the marketplace that companies like Jetpack operate in. Led by a black female founder, Jetpack is a “last-mile” peer-to-peer delivery service that successfully raised over $250K through equity crowdfunding. 

(Jetpack Equity Crowdfunding Page. Image: Republic.co) 

Rent Parties

As Carter G. Woodson launched Negro History Week in Washington, DC in the 1920s, rent parties were roaring in black communities across the nation. Especially popular in urban communities like Harlem, rent parties crowdfunded rent for tenants that needed it. Live music, good food, and prohibition era drinks often highlighted rent parties. A cover fee was charged, and/or a hat was passed to collect funds to keep a roof over the heads of families who needed it most.

(Rent Party Invite. Image: Langston Hughes Papers)

Renters in the 1920s and the decades following did not have a platform like Whose Your Landlord that provides property reviews, renter insights, and landlord accountability. When families lost income due to members being incarcerated, rent parties kept the family afloat. Today, Pigeonly allows families to communicate with an incarcerated loved one more affordably, continuing the personal connection that crowdfunded rent money could never replace.

Equity Crowdfunding 

The first African American President of the United States of America played a pivotal role in empowering startups to solicit investments from non-accredited investors, but he was not alone. Congressional Black Caucus (CBC) members Terri Sewell (D-AL7) and Eleanor Holmes Norton (D-DC) joined President Obama at the signing ceremony for the JOBS Act. Other CBC members such as U.S. House Financial Services Committee ranking member Maxine Waters (D-CA43) provide oversight of the equity crowdfunding market. 

(Eleanor Holmes Norton (D-DC) and Terri Sewell (D-AL7) join President Barack Obama and others at the signing of the JOBS Act. Image: The White House/ Pete Souza)

African Americans and other communities have – historically – been frozen out of wealth building opportunities necessary to build generational wealth. Equity crowdfunding changes that by unleashing $1.2 trillion in black consumer buying power to fund startups, and by enabling black entrepreneurs to have a “friends and family” round of funding that does not require wealthy accredited investors. Black owned businesses like theCut, Jetpack, WhoseYourLandlord, and Pigeonly have raised over $384,000 and engaged over 950 investors on Republic.

"I called on Congress to remove a number of barriers that were preventing aspiring entrepreneurs from getting funding. And this is one useful and important step along that journey" - President Barack Obama 

The Global African Diaspora has, for generations, employed crowdfunding innovations to break socio-economic barriers and fund dreams. As we celebrate Black History Month, African American innovators and investors are on the leading edge of the new opportunity. 

In 1933, Carter G. Woodson published The Mis-Education of the Negro. He says this about Black entrepreneurs: “properly awakened, [black entrepreneurs] can do the so-called impossible in the business world and thus help to govern rather than merely be governed.’

Equity crowdfunding connects the legacies of President Obama, African American tenants, and West African community funders, and it is an awakening for today’s entrepreneurs and investors. 

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An entrepreneur and investor, Brandon is co-founder of GAUGE. At Values Partnerships he leads a nationwide casting tour sourcing diverse entrepreneurs for ABC’s Shark Tank, and marketing campaigns for entertainment projects. He is also leading an effort to support entrepreneurs through developing a network of capital, skill-building, and other resources. Text him to talk business - 2028313031 / brandonandrews.me

This educational article is provided by Republic to help its users understand this area of the market, it should not be construed as investment advice as it is impersonal, disinterested and was produced by Republic for Republic’s users, without remuneration received or expected.