The bank has made an effort to reach out to black entrepreneurs, and some fear his passing will leave a void.
In finance, the purest definition of “woke” is the effort to expand markets to lend to new communities of entrepreneurs, enroll in previously untapped customers, and increase prosperity for a wider range of people . It is far from being a charitable enterprise. When JPMorgan Chase
Trying to bridge the racial divide in finance is just good business.
The distressed venture capital community could credibly be accused of crony capitalism. Last year only $1 out of $100 in the US venture capital investments went to black founders. Silicon Valley Bank CEO Greg Becker was working to fix this problem. “We want to make sure [the innovation economy] is wide enough for everyone to participate,” Becker said at a private lunch during the AfroTech conference in Austin, Texas, last November. “Everyone.”
Becker is now under scrutiny after his bank collapsed dramatically two weeks ago. SVB
Nothing in the bank’s financial information suggests the “woke” loans had anything to do with its collapse, Rodney Ramcharan, professor of finance at the University of Southern California’s Marshall School of Business, said the PA. “It’s not about opinion,” he said, “it’s about real data.”
“SVB was on to something very special which was getting bigger and bigger.”
On the contrary, the bank has found many new customers over the past few years and has grown rapidly. He held $49.3 billion deposits at the end of 2018 compared to $173.1 billion at the end of 2022. The downside was the size of these deposits. Because many of them were over the $250,000 FDIC insurance limit, customers were quicker to get their uninsured money out of the bank, which made the run worse.
“There is now a backlash against black people getting funding, or being appointed to boards, or any demands that existing stakeholders open up the economy in a meaningful way,” said William Griffin, an entrepreneur. black and former chief ethics officer at AI. Hypergiant company. “So whenever something fails, they say people get distracted by being awake, you know, the whole go-woke-go-broke catchphrase.”
Last summer, SVB announced an $11.2 billion program to lend to small businesses and low-income home buyers, and it named a former Chase executive to lead an initiative to expand opportunities for women, black and Latino entrepreneurs. “SVB was on to something very special that was growing steadily,” said Jasmine Shells, co-founder and CEO of the Chicago-based company. the software startup Five to Nine told Forbes.
SVB’s demise will leave a void for many black entrepreneurs such as Shells and James Norman, an Oakland-based co-founder of venture capital investment group Black Ops VC. Norman said the bank had approved him for a mortgage, taking into account assets such as private equity ownership that he doubts traditional banks would have accepted. SVB was ‘built for what we do’, said Norman Forbes. “They want the ecosystem to thrive.”
Norman said the bank’s collapse would likely impact black and brown customers more heavily in terms of access to financial products and networking opportunities. “If you’re a white founder, there are ramifications too, but…you’ll still have greater access to financial tools, just based on how things have traditionally worked,” Norman said.
SVB wasn’t exactly a beacon of diversity. Only 6% of its American employees are black, and there is only one black director on its 12-member board. But he has worked to support greater diversity in the broader tech sector. Among the groups he had partnered with or sponsored were the Black Venture Capital Consortium, BLCK VC and Blavity, which runs AfroTech.
Chicago-based founder and investor Stella Ashaolu said SVB sponsored a Black History Month networking event that she helped organize. She said she started doing business with them in 2017 for her startup WeSolv, and is in the process of finding several banks that will house these funds now. While there are plenty of companies to collect deposits, she said, there aren’t as many that have intentionally supported black founders.
“SVB in particular has been a leader in supporting black organizations that the founders are part of,” Ashaolu said. Forbes. “And so I think their disappearance is going to have a resounding impact on these organizations. I hope others will see this gap and take advantage of this opportunity.