| Last week I wrote about how the Council with some of our new technology is going to promote more MBE to MBE business. This week I want to focus on another way in which MBEs and other entrepreneurs can support each other by investing in each others companies. I have long felt that one of the critical missing pieces of minority business development is the lack of a functioning capital market - for MBEs. My colleagues in finance departments around the country would argue that the U.S. capital market is pretty efficient and would not tolerate discrimination based on non-market characteristics like race, ethnicity or gender when there was money to be made. The saying is the only color that matters to investors is green. Yet I would argue that capital markets are not efficient when it comes to minority businesses. There are good, financially strong, well managed minority businesses in growth industries that are largely overlooked by capital markets. One solution to this problem is for minority firms and entrepreneurs to establish their own markets to harvest cash and investment funds specifically to find minority businesses in which to invest, particularly at earlier stages in their development. The minority businesses that reach high eight figures and beyond are already on the radar screen of capital markets., but those nascent MBEs who have a plan and a mechanism to execute have trouble accessing sources of capital usually reserved for angel investors and venture capitalists. Unfortunately, the market for angel investors is not a very diverse group and venture capitalists are too focused on hitting home runs than scrappy MBEs who can bunt for a hit and swing for the fences when they get more experience. What if minority entrepreneurs and other investors had the ability to identify MBEs and invest in them directly? It often would not take much capital for investors to diversity their capital in ways that gave them some protection, and more importantly, the recipients of that capital would get lower cost more patient capital than what is available to them today. Why wouldn't MBEs who are often totally invested in their businesses not want the opportunity to participate in the success of other MBEs? I think there is money in minority communities and elsewhere that can be accessed that would support the development of MBEs. If you look at the history of Wall Street, in the early days brokers worked on the street hawking stock in companies to would be investors. In those early pre-SEC days, it was a buyers beware market because wherever there is money in high concentrations, there are thieves. And in the early days of Wall Street it was not always only the suckers who were separated from their cash. Today we have technology that, either for MBE capital markets or capital markets in general are going to make possible the elimination of the middle man, just as the middleman has been eliminated in other service industries. A MBE capital market could simply list MBEs looking for capital. Each MBE could tell their story and spell out the nature of the deal they are offering investors. Think of the business it would create for consultants, accountants, financial professionals., many of whom might also be certified minority suppliers. With the resources of the NMSDC with close to 15,000 MBEs, there are probably enough market ready MBEs to justify an "exchange" where investors and MBEs could go to connect. for capital. Perhaps this is only a whimsical dream of an aging economist, but if we are going to close the wealth gap, MBEs will need to access the vast pools of wealth that already exist in minority communities around the world. | 
