Colorado businesswoman Zaneta Kelsey sees no reason why resistance to diversity efforts in business should hold up legislation meant to even the playing field for entrepreneurs of color.
Kelsey, CEO and co-founder of the tech startup accelerator Access Mode, is one of 14 Colorado businesspeople who have signed a letter urging congressional leaders to pass two bills that would increase the entrepreneurs’ access to capital. The July 17 letter to members of the Senate Committee on Banking, Housing and Urban Affairs was endorsed by roughly 100 people from 25 states.
Kelsey doesn’t think opposition to DEI — diversity, equity and inclusion programs — will doom the legislation. Some conservative politicians oppose the programs. Rep. Tim Burchett, R-Tenn., called Vice President Kamala Harris a “DEI Vice President” after she announced her bid for the White House.
Harris is the first Black person and Asian American as well as woman to be vice president.
Conservative lawmakers have blamed diversity programs for problems in business and even the Baltimore bridge collapse in March.
But Kelsey doesn’t believe the political backlash against DEI will influence lawmakers’ decision on the legislation promoting entrepreneurship. The bills are being championed by the Center for American Entrepreneurship and Engine, which advocates for technology startups.
“Regardless of where you sit with your politics, you look forward to seeing new jobs from these businesses. You want to see them grow so they can contribute to the economy and jobs,” Kelsey said. “The more innovation that we have in our country, the stronger we will be. The more potential there will be for an economic upside for everybody.”
The Center for American Entrepreneurship formed in 2017 to build a stronger, more resilient and inclusive economy by seeing that entrepreneurs thrive, said founder John Dearie. He was motivated by research saying that innovation in the U.S economy has declined.
Another impetus was to reduce the barriers that women and people of color face. A 2021 analysis by the Federal Reserve Bank of New York said that white small-business owners were twice as likely to be fully approved for financing as Black and Hispanic owners.
A 2022 report by the professional services company Accenture found that Black business founders received only about 1% of the funding allocated by venture capital investors even though Black Americans were opening businesses at a faster pace white Americans. As a result, Accenture said, up to $67 billion in business opportunities was lost between 2016 and 2020.
One bill backed by the business organizations would create a new tax credit for private-sector investors making equity investments in or long-term loans to community development financial institutions. Those institutions provide credit and other financial services to underserved markets and populations.
The other bill would raise the cap on funds organized under a section of the Investment Company Act from $10 million to $50 million and double the number of permitted investors from 250 to 500. The goal is to encourage greater diversity among investors.
A version of the Expanding American Entrepreneurship Act has passed the House.
“Who gets funded or who gets capital depends a lot on who’s doing the investing. Right now, the investment base is overwhelmingly white and male,” Dearie said.
“There’s nothing wrong with being a white male. I’m a white male,” Dearie added. “But we want a more equitable distribution of access to capital. One way to get that is to diversify the investor base.”
Kelsey believes there is a tendency for investors to feel more comfortable with people like them. “When founders of color who might talk different, look different, who are solving problems that maybe don’t exist in the world of current venture capitalists, it’s a harder point to get to to reach that person.”
Kelsey, who has been a software developer and led marketing strategies for different companies, got involved in a state program to help keep small businesses going during the COVID-19 pandemic. She started Access Mode with Kevin Allen, who has founded tech companies.
The enterprise provides mentoring, funds and other resources to entrepreneurs of color who are at the prototype stage.
“To this day we’ve admitted 25 companies into our accelerator program. They’ve raised just under $3 million,” Kelsey said. “We are really proud of the work that we’ve been able to do, but the gap still exists.”
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