Sooner or later entrepreneurs will need business capital, and while private equity is one of the most coveted forms of funding, it remains the most elusive.
This is especially true for minority-owned enterprises. While Hispanics and African Americans make up 28 percent of the U.S. population, only 1 percent of venture capital is going to minority communities, according to Duane McKnight, a managing director at Syncom, Inc., a venture capital fund specializing in minority-owned businesses.
This troubling statistic, among others, sparked a discussion between the National Association of Investment Companies and the New America Alliance. Both groups. whose members include some of the country's leading Hispanic and African American business leaders, are strong promoters of accessing capital to minority enterprises.
These talks led to the creation of The Marathon Club, an organization whose primary focus is to increase the flow of capital to minority entrepreneurs and minority-run private equity firms. Today, the Washington D.C.-based organization has more than 400 members. The group hosts forums and private receptions throughout the U.S. to introduce deal makers and entrepreneurs. It's Web site, for members only, offers a wealth of information on the private equity markets to help entrepreneurs become more capital savvy.
In October, Joe Watson, chief executive officer of Without Excuses and Strategic Hire, a diversity-focused consulting and executive search firm, was named chair of The Marathon Club. He replaced cochairs and cofounders Mr. McKnight and veteran movie producer, Moctesuma Esparza.
"American business and capitalism is fundamentally rooted in who knows each other, who has access to information, resources, people, time and money" says Mr. Watson. "Historically, [minority] networks are very fragile and pretty much in their nascence; we don't have that rigor that comes from hundreds of years of conducting business."
To help build that foundation, The Marathon Club holds events like its annual Deal Makers Summit. The forum brings entrepreneurs, top corporate executives, and private equity investors together to generate potential deals. The Talent and Opportunity Intersection connects high-level executives with corporate boards and jobs at private equity firms and their portfolio companies.
It was at a recent event that Pilar Avila, vice-president of marketing at Palladium Equity Partners, a New York private equity firm, discovered a media company with significant investment potential.
"I can tell you from the Palladium perspective, we've had the ability to take a look at a number of investment opportunities," Ms. Avila says. "Certainly deal flow is being generated, and the right environment is there to identify potential opportunities, otherwise we wouldn't be involved."
The idea of Hispanics and African Americans collaborating on issues of wealth building is relatively new, Mr. Watson says, and one he plans on fostering.
"We need to enhance and strengthen the relations between the African American and Hispanic business communities and focus on our commonalties and shared goals," says Mr. Watson.
Among the biggest challenges both communities face is "that America in general doesn't believe we exist," says Mr. Watson.
Raising this awareness is critical, Mr. Watson says, because it eliminates the excuses that limit participation in the emerging domestic market. "We can demand full participation in the entire American economic system."
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