The National Association of Investment Companies (NAIC) has received a $1.4 million grant from the Minority Business Development Agency (MBDA) for a project that will put together around $1 billion for new investment into black-owned businesses.
This news comes at a time when many of the 11 million minority- and women-owned business enterprises (MWBEs) of the nation is finding it challenging to secure start-up capital.
The NAIC plans to launch the Minority Growth Equity Funds Initiative with the grant received. The primary purpose of the program is to increase the amount of capital available for MWBEs braced for growth. The NAIC is planning to start disbursing the money by 2020.
The MBDA, which is a member of the U.S. Department of Commerce claims that they are the only federal parastatal that is promoting the development and universal competitiveness of U.S. minority business enterprises.
The NAIC says the capital will come with institutional investors and be released by private equity funds of funds (FOF). The FOFs will disburse the funds to the growth firms, and the firms will then invest in MWBEs. The FOFs will also be mandated to write a set of rules to ensure the management of the funds. The NAIC, on the other hand, will grant each of its member firm and non-NAIC member firms the opportunity to participate in the process.
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