March 11, 2019
With the gracious company of Morgan Stanley, Gratitude Railroad had the pleasure of hosting an Evening of Inclusive Innovation with Alice Vilma on February 27.
The evening featured a fireside conversation of Alice Vilma’s leading work at Morgan Stanley’s Multicultural Innovation Lab, a community of early stage technology and technology-enabled startups led by women and multicultural entrepreneurs. Roughly 30 investors and asset owners convened at New York City’s newest neighborhood eatery, West Bourne on Sullivan Street, for a discussion on the enormous missed investment opportunity of multicultural and women-owned businesses (WMBE).
Vilma shed light on the disparity between perception and reality of the WMBE funding landscape. Historically, traditional investors maintain entrenched in biases tied to race and gender that influence their investment decisions and evaluations of WMBEs. Notably, there is an unfounded perception that multicultural and women-owned business owners are more likely to default on debt and are riskier. Investors believe that WMBEs are twice as likely as their male counterparts to achieve below-market returns, despite market data that defies such perceptions, showing that women-owned businesses generate 2% alpha and minority-owned businesses perform at or above-market.
Investors are also less likely to invest in sectors or businesses they don’t know well. Vilma cited black women’s haircare as one such example in which white male investors could not relate to or understand the end-customer, making them less likely to invest. Finally, research has shown that investors scrutinize WMBEs more stringently and hold higher standards for confidence and pitch performance than non-minority-owned businesses, reflecting inherent, unwarranted biases in evaluation and diligence.
Vilma drove home that the opportunities to invest in WMBEs are vast are growing. Investors need to recognize and breakdown their internal biases in order to capitalize on these opportunities and remedy the perpetual funding gap that is limiting economic growth and upward mobility for underserved groups.
With craft herbal cocktails, urban organically grown hors d’oeuvres, and an exuberant room of investors in support diverse and multicultural-led businesses, we certainly shared an evening to remember. Many thanks to Morgan Stanley and West Bourne for your participation. Learn more about the disparity between perception and reality of multicultural and women-owned businesses here.