PROVIDENCE – The word “entrepreneurship” may call to mind a recently opened business or a new product. But a sometimes overlooked, and often lower-risk, avenue to entrepreneurship is acquiring an existing business, says the team behind New Majority Capital, a search fund launched earlier this year in Rhode Island.
Using this pathway, the Providence-based team of entrepreneurs and impact capitalists wants to create more opportunities for people of color, women, immigrants and members of the LGBTQ community to become business owners and secure the funding they need for success.
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“We’re looking to close the racial and gender wealth gap when it comes to underrepresented folks in Rhode Island,” said founding partner Havell Rodrigues, “especially for BIPOC [Black, Indigenous and people of color] and women … and our area of expertise is around small-business asset ownership.”
To support aspiring business owners in achieving this goal, New Majority Capital provides capital and other resources, such as due diligence assistance. While still in its early stages, the group is so far working with around 10 entrepreneurs, and has raised about $170,000 in a community fundraising round while also seeking investments from larger foundations.
Rhode Island has a particularly great need for more opportunities for minority business owners, Rodrigues says. According to a 2022 report by the Rhode Island Foundation, just 7.4% of firms in the state are led by people of color, placing Rhode Island well behind the national average of 18.3%.
Through facilitating business acquisition, Rodrigues says, the state can improve equity while offering entrepreneurs a path to business ownership that may offer more financial security.
“If one wants to become an entrepreneur, it’s a lot riskier and more daunting to create something from scratch, as opposed to taking over an existing business and growing it,” Rodrigues said. “They have a proven customer base, some type of revenue and the entrepreneur gets a salary on day one.”
The timing is also right, he added. With many baby boomers hitting retirement age – and sometimes retiring earlier than planned, as commonly seen in the pandemic era – this shift presents more opportunities not only for aspiring business leaders but for longtime business owners to continue making an impact in their communities.
“This is a great opportunity to help those existing business owners who are retiring realize the value over what they’ve created, and allow them to leave a legacy behind,” Rodrigues said, “while at the same time helping BIPOC and women business owners to take over businesses.”
Kris Schumacher, also a founding partner at New Majority Capital, said that through this work, the group wants to foster opportunities for individuals who are passed over due to race, gender or a nontraditional business background.
“It’s a blindness from the existing base of investors who don’t see these opportunities because they don’t know where to look,” Schumacher said. “They are only funding people who have the right experience, who have the Ivy League education. … We’re trying to expand that opportunity to all those people who we know could do this well and we think that this is a good financial opportunity, as well as a good social impact.”
Other support services the group will provide also play an essential role, he said.
“A lot of small-business owners struggle because they have to wear many hats,” Schumacher said, from administrative tasks and managing employees to marketing. “It can be daunting, and it can also be expensive if people are outsourcing that stuff, so we’re building a suite of back-office support services” to help with responsibilities such as bookkeeping and information technology.
On Thursday at 5 p.m., New Majority Capital will hold an informational panel on entrepreneurship through acquisition at Venture Café Providence.
While based in Providence, and initially focusing on Rhode Island, the group will also work with entrepreneurs in other states.
“The goal is to create a model that works in Rhode Island and then replicate it everywhere else,” Rodrigues said.
Jacquelyn Voghel is a PBN staff writer. Contact her at Voghel@PBN.com.
