Here in the United States, 2017 has gotten off to a frenetic start. Particularly since the inauguration, the daily news cycle has been so crowded that the World Economic Forum’s Global Risks Report 2017 has barely garnered any attention at all. That’s pretty remarkable, given that the report concludes that rising income and wealth disparity is the number one risk to global economic stability. In the sober framing of the report authors, “‘Growing income and wealth disparity’ is seen by respondents as the trend most likely to determine global developments over the next 10 years.”
On one hand, for the World Economic Forum to make this statement should be nothing less than shocking. On the other hand, it should come as no surprise at all.
The economy, stupid.
When James Carville coined the phrase, “the economy, stupid,” in 1992, he probably had no idea that his snarky wordplay would take on a life of its own, let alone how it would continue to ricochet twenty-five years on.
In 2010 the US Department of Commerce Minority Business Development Agency published a report stating (among other findings), “Between 1997 and 2002, minority-owned firms far outpaced non-minority firms in terms of growth in number of businesses, total gross receipts, number of employees, and total annual payroll,” and “Increasing the flow of capital for minority-owned businesses must be a national priority to re-energize the U.S. economy and increase competitiveness in the global marketplace.”
Five years later, McKinsey published their finding that, “Gender inequality is not only a pressing moral and social issue but also a critical economic challenge. If women—who account for half the world’s working-age population—do not achieve their full economic potential, the global economy will suffer.”
Moreover, in the same month, Kauffman further noted, “new businesses account for nearly all net new job creation and almost 20 percent of gross job creation,” and “immigrants were nearly twice as likely as native-born Americans to start businesses.”
Completing the circle, in February 2016, the Kauffman Foundation noted, “The need to dramatically increase investment in minority entrepreneurs is vital to the survival of the U.S. economy.”
Finally, futurist Edie Weiner has been making an eloquent case for at least the past five years that we are in the thick of a profound and fundamental economic transformation, in which entire industries are being displaced at a breakneck pace, and innovations in the new economy are creating substantially all of the opportunities for job and value creation.
Inequity is a treatable disorder.
With these realities on the table, it becomes inescapably evident that systems and policies that sustain and exacerbate inequity are self-destructive.
George Orwell aimed to skewer Stalin with his allegorical political platform, “All animals are equal but some animals are more equal than others.” To our own detriment and dismay, we in the West are now staring squarely down the point of Orwell’s pen.
The only way to safeguard our economic well-being is to diligently and expeditiously dismantle systematic drivers of inequity, with particular emphasis on improving access to capital for innovative young companies led by women and people of color. And yes, that expressly includes immigrants.
We can choose to recognize our reality and embrace the new economy, or we will continue to suffer worsening consequences.
Not a revolution. Reinvention.
We don’t need a revolution, but we do need reinvention. And we need it now — there is no time to waste.
Reinventure Capital is working to reinvent access to early growth stage capital for innovative young companies led by people of color and women. The Reinventure investment thesis is designed to deliver both intentional impact and competitive financial returns, without compromise to either.* We aim to cultivate a portfolio of profitable, growing companies that matter — to their customers, their employees, their suppliers, their communities, and yes, their investors. Companies that are leading the way out of the old economy and into the new one.
At Reinventure, we’re reinventing investing. We’re proud to be in extraordinary company with others who are also reinventing the world to create a more equitable future for all — the world isn’t waiting, they’re not waiting, and neither are we. Please join us.
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*While there’s no such thing as a guarantee in investing and no one can reliably predict the future, Ed’s record at UNC Ventures provides historical evidence that it is indeed possible to invest for both financial returns and social value creation. To learn more, please contact us.