The organizers draw on analogies to explain their ambitions for PowerMoves and New Orleans.
“What Atlanta is for blacks in corporate America, we want New Orleans to be that for startups,” said Rod Miller, president of the New Orleans Business Alliance.
Or another way to think of it, they say, is that PowerMoves could serve a role in minority entrepreneurship like what the famed, buzz-generating South By Southwest festival does in Austin, Tex., with music, film and technology.
“We’re going to re-brand New Orleans as a place for minority entrepreneurship,” said Leslie Jacobs, chief executive of the New Orleans Startup Fund non-profit business seed program who also grew and sold the Rosenthal Agency insurance brokerage and played a high-profile role in the Louisiana education reform movement.
The idea of PowerMoves is to create an unprecedented national assembly of minority entrepreneurs and the investors and advisers who could help them, building a support network for a group of business founders that historically has lacked support.
Scattered programs for minority business founders operate in different spots around the country. “What you have is what I’ll call pockets,” of activity, Jacobs said. “You don’t have something that’s trying to marry the continuum of the space.”
“This connects the dots,” she said. “This pulls it all together.”
The underlying issue is clear. In 2013, according to the University of New Hampshire’s Center for Venture Research, only 7 percent of firms presented to early stage angel investors nationally were minority-owned. The number has stuck at that level for several years.
A 2010 study by the CB Insights investment data firm found African-Americans owned less than 1 percent of ￼companies receiving venture capital. About 12 percent of the business founders were Asian. Eighty-seven percent were white.
Recent news reports describe a study in the Journal of Consumer Research in which black, Hispanic and white owners of identical small businesses wore identical clothes and visited banks seeking business loans. The minority applicants faced more scrutiny and received less help from loan officers.
In a Forbes magazine article from April, venture capitalist David Teten argued investors are missing opportunities, considering that the United States no longer will have a racial majority – which now is white – by 2043, with the expected population growth of multiracial, Asian and Hispanic groups. But he cited a National Venture Capital Association and Dow Jones VentureSource survey from 2011 finding 86 percent of venture investors were white and 76 percent were white men.
Similar shortages of minorities in business startup circles are evident in New Orleans as they are nationally, said Miller and Jacobs.
“The startup space, the technology space, the access to capital, is just sorely underrepresented,” Jacobs said.
“That’s a national issue, not local one,” said Miller.
Minority entrepreneurs often lack the financial cushion needed to remain dedicated to startup businesses, said Jacobs and Miller. They might be the first in their families to attend college. They grapple with student loans and the need to support themselves with professional jobs. Their families and friends lack the wealth to serve as their earliest investors.
“If you don’t come from wealth, there are unique barriers of entry in the startup space, no matter how smart you are,” Jacobs said.
Jacobs and Miller said they have watched promising minority entrepreneurs leave behind their startups out of the need to return to corporate paychecks.
“What has become very apparent to me this last year in sourcing deals is that many of these entrepreneurs come in without runway,” or financial room to give their new business idea a full chance, Jacobs said. A goal of PowerMoves is to build the runway, “So they have the time and space to innovate.”
This is what PowerMoves will offer: Twenty entrepreneurs competing in three business pitch competitions with cash prizes, another 20 participating in a business building boot camp produced by the TechStars accelerator from Boulder, Colo., and culminating with presentations to potential investors, a schedule dotted with networking lunches, cocktail hours and dinners.
PowerMoves also is starting a year-long fellowship program for five companies based in New Orleans, providing technical assistance, mentoring, donated office space, help assembling an early round of investment fundraising and direct investments of $50,000 for an entrepreneur selected from the boot camp and $25,000 each for four others. The fellowship also includes relocation subsidies for firms to move to New Orleans if they started elsewhere.
Jacobs and Miller argue an innovation-friendly, post-Hurricane Katrina New Orleans is the perfect place to draw the focus of minority entrepreneurs from across the country and nurture new enterprises locally.
“We’re getting the attention of some incredibly talented people who are very excited that a city is doing this and want to be part of it, which is new for us,” in New Orleans, Jacobs said.
“The more talent you have, you build critical mass,” in the city, Miller said. “A talent attracts A talent.”
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