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How do we build wealth across generations among people of color and do it in a way that is accessible to a critical mass of people? It’s a question that four friends who met through their business school connections began seriously debating after the spotlight on social inequality.
Their answer is to increase business ownership by people of color, but with a twist. Instead of helping founders start something from scratch, they decided to focus on entrepreneurship through acquisition (ETA), the acquisition of existing businesses. “This is a much less risky path to entrepreneurship. new majority capital, Providence, RI and the company they founded to boost ETA. “We have cash flow from day one.”
Part of that plan is based on predictions of a tsunami of corporate silver coming to market. That’s because millions of baby boomer-owned businesses will be sold or bequeathed over the next 20 years. “This is a once-in-a-lifetime opportunity for undervalued entrepreneurs to acquire businesses and begin their journey to building wealth across generations,” says co-founder Allegra Stenett. Co-founder Darryl Lindy says there are about 20,000 small businesses with employees in Rhode Island alone, and 80% of them don’t have succession plans.
The New Majority has two parts. The first is the New Majority Capital Foundation, which operates two programs. One of his, called Succession Ready, helps existing business owners looking to retire to prepare their companies for succession over her five weeks. Launched last fall in Providence, the book covers everything from alternatives to selling to how to boost your company’s valuation.
The other is bETA, which is scheduled to start next week. This is her eight-week accelerator aimed at teaching entrepreneurs of color what they need to know to buy and grow an existing business. (The first and last few days are face-to-face and the rest of the time is virtual, a particularly important consideration for participants with full-time jobs). , recruitment and operations. It also covers finding a business broker. Finally, get a certificate from Babson College, which offers the curriculum. It will launch in Rhode Island, but the team plans to expand nationwide this year.
The New Majority held an introductory workshop for about 100 BIPOC individuals in January to give them a glimpse into the ETA. About 35 of them will be in the first cohort.
Alumni form the pipeline of New Majority’s $50 million endowment. We provide up to 100% of the financing to make acquisitions, with the ability to help finance approximately 50 acquisitions with banks and other investors. There are 3 structures. One for those who can pay the down payment and the rest she two for those who can’t. (all include her 10% seller loan). Those with a 2.5% down payment resource can get a 7.5% stake in her from New Majority and Seller financing in addition to the SBA 7(a) loan. Otherwise, they can divide the debt and equity, as well as the seller’s funds. Alternatively, the entrepreneur is placed on a vesting schedule for her 100% equity while the New Majority provides her 90% of the funding.
Co-founder Chris Schumacher says the stock is “designed to be as unexploited as possible.”
there is also crowdfunding campaign Allow unaccredited investors to invest in the company.
Partners first explored the idea of creating a venture studio. We help founders who can come up with startup ideas and get those businesses up and running. However, they realized there were obvious problems with that approach. First, the failure rate of new businesses in the United States is high, and second, there are so few successful ideas that they focus on a small number of companies, which limits their numbers. It is possible. Entrepreneurs can benefit and start generating generational wealth. “If only a few people succeed, it doesn’t change,” he says, Mr. Stennett.
They decided it would be better to offer a soup-to-nut solution. Rodrigues said:
Ultimately, as co-founders feel, this is a plan that works for everyone. “Small businesses are great drivers of wealth creation and a great value proposition for all involved,” says Lindy.