A 'win-win:' U of M, BBA, and Community LIFT join forces to create venture fund for Black tech businesses

A ‘win-win:’ U of M, BBA, and Community LIFT join forces to create venture fund for Black tech businesses

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A ‘win-win:’ U of M, BBA, and Community LIFT join forces to create venture fund for Black tech businesses

Published by bizjournals.com on Oct 18, 2022

For more than a decade, Kurt Kraiger, Ph.D., had worked at Colorado State University in Fort Collins. But the professor desired a change; he wanted to live in a bigger city, and one where he could have more of an impact on the community. So, about four years ago, Kraiger took a position at the University of Memphis — and quickly fell in love with the Bluff City.

Now, he’s channeling that affection into a new project, which could bring significantly more funding to local Black tech businesses.

“This is something I was really excited to jump on board with, because I love my city,” said Kraiger, chair of the Department of Management and associate dean for academic programs and research in the Fogelman College of Business and Economics. “It just feels like a great sector to have an impact on the future of Memphis.”

BANK seeds a grant fund

Kraiger is working on Black Wealth Advancement through New Business and Knowledge Development (BANK), a project that the U of M is launching in partnership with the Black Business Association (BBA) of Memphis and the economic development agency Community LIFT.

The program has just received a three-year, $700,196 grant from the U.S. Economic Development Administration (EDA) — a bureau within the U.S. Department of Commerce. The grant will ultimately be used to help boost Black-owned, tech-focused microbusinesses. But these microbusinesses, which are often startups, won’t directly receive the EDA funds. Rather, BANK is set to use the grant money to build a $5.3 million fund — which will then, in turn, be dispersed to the microbusinesses.

“What we’re trying to do is build infrastructure to help … raise additional capital in the form of venture funding to eventually be invested in Black-owned microbusinesses in the tech sector,” Kraiger said.

The roles of the partners

U of M, Community LIFT, and the BBA will all play different roles in building the fund.

Community LIFT is expected to hire one or more staffers, who will focus specifically on raising capital that can be used for later investment in the tech sector.

The BBA will have two different tasks. It’s going to hold training for tech-focused Black-owned businesses on how to scale with or without investments. And it’s going to work within its network, to identify business opportunities that make it easier for Community LIFT to fundraise.

U of M acts as the project’s coordinator. The institution formed the partnership, and it’s the one that will receive the grant and transfer portions of it to Community Lift and the BBA. It’s also set to handle program evaluation and track metrics to ensure the project is progressing.

“We’re the ones ultimately accountable to the EDA, to show progress over three years,” Kraiger said.

‘The best ways to get there’

But why focus on Black-owned microbusinesses in the tech sector?

According to Kraiger, there are a few different reasons for this.

As he and his team noted in their project proposal, Memphis has the highest concentration of Black-owned businesses in the U.S. But of the nearly 40,000 local Black-owned businesses, only 800 have employees — and the average number of employees at local Black-owned businesses is one of the smallest in the nation.