By Muriel Vega / Hypepotamus
In the late 1800s and early 1900s, Durham, North Carolina, was the home of a thriving business district with over 100 black-owned businesses — from financial services to small shops — that sustained the local economy. The heart of the district was historic Parrish Street, dubbed “Black Wall Street” by many locals (although Durham’s version should not be confused with Tulsa, Oklahoma’s Black Wall Street, which was infamously bombed and burned to the ground in 1921), was lined with these successful businesses.
Now, more than a century later, the legacy of Parrish Street remains alive with new injections of technology and the hustle of startup life into its core.
“The characteristics that propelled Durham’s Black Wall Street back in its heyday are the same pillars of a successful business community today: grit and determination, collaboration, partnership, the list goes on,” says Dee McDougal, one of the co-founders of the annual Black Wall Street: Homecoming conference for entrepreneurs. Since BWS: Homecoming began in 2015, black entrepreneurs have traveled to Durham to celebrate the area’s rich entrepreneurial history, connect with other founders, and seek much-needed capital to scale their businesses.
Minority-led startups currently receive about 5 percent of the $70 billion in total venture capital invested annually — but they lead 40 percent of the firms pitching for venture capital. They are far less likely to receive funding than their white and Asian counterparts.
In the Southeast, an area infamous for not attracting much venture capital, minority-led startups struggle even harder. That’s where BWS: Homecoming comes in.
“The idea of Black Wall Street: Homecoming came together through conversations around what it would look like to bring black VCs to Durham to see and experience the entrepreneurial culture here,” says McDougal. McDougal says she and her co-founders — Tobias Rose, Talib Graves-Manns, and Jesica Averhart — took a “napkin-sketch idea plus some strong hustling to execute and the support of the Durham community” to bring the conference to life three years ago.
The three-day conference includes workshops and panel discussions on the current state of venture capital in the area, as well as opportunities to connect with investors, other founders, and mentors. It’s also a great resource for talent, as the North Carolina’s Research Triangle area boasts Duke University, the University of North Carolina, and North Carolina State University, along with multiple programming boot camps.
“For us, capital isn’t just money, but access to ideas and people, too,” says McDougal. “It’s important for angel and institutional investors to attend and be accessible, as well as thought leaders and experts in the entrepreneurial space to share their stories. We’re also intentional about curating an experience specifically with minority entrepreneurs in mind.”
Black Wall Street: Homecoming has seen double-digit increases in attendance year over year. Several attending companies have raised funds following the event. In the same amount of time, Durham has quickly climbed the charts as the city with the third highest average annual revenue for black-owned business; it’s ranked among the top 10 areas to grow a black-owned business.
“It creates a powerful week for black entrepreneurship, and it happens right here in Durham,” says McDougal.
Black Wall Street: Homecoming in Durham in only three years has become a critical connection point for Southern entrepreneurs.
An essential partner over the last two years has been the Google for Entrepreneurs Exchange for Black Founders program. The Exchange is a week-long boot camp that preps entrepreneurs for pitches with investors and provides mentorship and resources to help close the investment gap. The boot camp is hosted by Durham’s Google for Entrepreneurs startup hub American Underground.
In 2017, companies came from eight states to participate in the Exchange, pitching products in the software, big data, consumer, and IoT (“Internet of Things”) industries.
After last year’s Exchange program, half of the participants raised capital, bringing the total of more than $1 million. This year, half of the participating companies walked away with a $25,000 investment from founder and managing partner of diversity-focused fund Backstage Capital’s Arlan Hamilton, who was a visiting judge.
American Underground is located at the heart of the old Black Wall Street district. It functions as a startup hub for founders in the area with investor resources and co-working spaces available. The occupants are as diverse as the legacy just outside of the doors — nearly 30 percent of its startups are led by women and 31 percent led by founders of color (a 10 percent increase from last year).
The team behind AU has been working on creating a more inclusive community by merging the area’s historic legacy and the hustle that has transcended through the decades.
American Underground has become a critical incubation hub in Durham.
“We didn’t create entrepreneurship in this city; if anything, we learned from the city how to be successful entrepreneurs,” says Phillipe Charles, director of communications and member experience at AU. “We have to look at programming and communications and how we’re interfacing with the larger community, always making sure that there’s a landing space that they can come and be a part of some of the things that we’re doing. That’ll always be a challenge.”
This year’s 2016-17 AU report shows the results of the team’s hard work: $39.4 million was raised by companies headquartered there — with 43 percent of those led by women and/or a person of color. This is a 47 percent increase from last year.
One of the AU startups that participated in the Exchange this year is financial tech startup Loanable.
Similar to John Merrick, a prominent African-American businessman in Durham who got his start by using his income as a barber to open North Carolina Mutual Life Insurance, Loanable’s CEO, Bernard Worthy, saw an opportunity from his experience as a coding boot camp student.
When Worthy needed financing options to pursue his education in programming, the interest rate on a student loan was outrageous, despite having a co-signer.
This problem quickly turned into a viable business idea after he partnered with COO Justin Straight and launched the Loanable platform, where students/graduates can formally request money from their friends and family at flexible interest rates.
“We’ve distilled this process that can be unwieldy, where the terms are often unclear or maybe someone has a change of heart, and created a pretty clear process,” says Worthy. “We’ve distilled that entire loan agreement down to about six different inputs. You just need to know your loan amount, your interest rate, and how long you want the loan to be. We give you a calculator to set your own rates.”
At the heart of the loan startup is community — how can you use your community beyond a regular crowdfunding model and help friends and family see a return on their investment? It provides students with a chance to boost their education without crippling their futures with crushing debt.
For example, instead of asking one person (or a bank) for $10,000 for your tuition, you can ask 20 people for $500 and set up one-to-one agreements with customizable interest rates, depending on your relationship.
Worthy says that perfecting his pitch during the Exchange for Black Founders boot camp at AU helped Loanable focus its product before reaching out to more financial tech mentors and investors.
That sense of community, reflected in AU’s mission to support entrepreneurs, can be felt in Durham’s thriving tech scene. A recent study found that despite Durham’s relatively low startup density (when compared to other leading tech hubs), the connections between local entrepreneurs and their surrounding communities are stronger in the North Carolina city. It also found Raleigh-Durham to be No. 4 nationally when it comes to fostering innovation and entrepreneurial growth.
“We’re at an exciting point in the city’s history and future,” says American Underground’s Charles. “There are a lot of ideas and people coming into the city. What that also means is that people who have been in the city don’t exactly know how to connect with those new resources or avoid being displaced by those newcomers.” And it’s American Underground’s job, he adds, to make those connections.