Technical.ly Pittsburgh Who can invest in startups? On Politics, Outreach and Venture Capital in Pittsburgh
High incomes and excess wealth are often associated with reinvestment, whether through philanthropy, small business capital, or other avenues. But if Pittsburgh has an inequitably wealthy population, should there be limits on who can pursue some of these investment options?
Last month, Technically published the first in a series of articles on the intersection of tech careers, race and economic mobility based on the income data initially compiled. In Pittsburgh, these census figures showed an increase in the number of residents earning an annual salary of $ 200,000 from 2009 to 2019. See the original story for more information on the data, as well as the methodology behind its collection. .
But that growth, while driven by the advancement of the local tech industry, has largely benefited the city’s white residents, the data shows. Our initial story looked at what these income inequalities mean for talent pool, small business growth, and community building.
Now we want to know: How does this income data relate to local venture capital trends? To answer this question, we sought the point of view of Kelauni Jasmyn, founder and CEO of Black Nation of Technology and general partner of Black Tech Nation Ventures.
One of the reasons for choosing $ 200,000 as the minimum annual wage for a high income earner in this data set was that this amount was considered sufficient to allow reinvestment in the community – in other words, excess money. of these high salaries is potential capital for startups. The figure is also in line with current SEC regulations on who can become an accredited investor. This is important because accredited investors are the preferred source of funding for private companies and other entities, and in fact, there is often a limit to the number of unaccredited investors that a company can withdraw money from.
But Jasmyn disputes this.
“Why does there have to be an income benchmark who can invest in?” ” she asked.
The premise of the number, as described by the SEC, is that people with high income or net worth are considered to have enough “financial sophistication” to take the risk of investing in a business. Jasmyn argues that logic doesn’t make sense, as other forms of risky investments are widely available to low-income communities through purchases like lottery tickets. Defining this limitation, she said, ensures that the choice of companies financed for their growth will remain with the wealthiest people and therefore will continue to promote systemic inequalities in the industry. It’s something Power meter founder and CEO Jim Gibbs also noted in the first article in the Technical.ly income data series.
Part of the problem, Jasmyn said, is with policies like the SEC’s that limit certain investment options to the wealthiest people. (A less limited option: The recently relaxed SEC regulations on crowdfunding allow anyone with at least $ 100 to invest in a startup through platforms such as Wefundr, as well as equity that can lead to gains or losses, depending on the success of the startup.) But another aspect is the lack of awareness in some communities of the possibilities offered by technology, both in terms of return on potential investment and lucrative career paths.
Jasmyn Herself Graduated First Local Coding Bootcamp Class PGH Academy, and her first job outside the program paid a lot more than she expected.
“I didn’t realize it was possible to earn close to a six-figure salary for an entry-level tech position,” she said, adding that she is now working to raise awareness of this potential to its community via Black Tech Nation.
But that awareness should extend beyond salaries and career paths, Jasmyn said, and reach Pittsburgh itself by finding ways to promote local success more broadly and with confidence in taking risks. on start-ups here. This, she continued, could help reverse the venture capital lag so far this year: “I don’t want Pittsburgh to be as ruthless as Silicon Valley, but I want us to not have afraid of taking risks.
Although Jasmyn is frustrated with the number of conversations that have taken place around these issues and the little action in response, she still has hope for the younger generation of Pittsburghers who want to “raise others with them.”
“Young and change mean the same to me,” she said, noting that more and more often she’s not the only one asking questions based on the assumptions behind regulations like those of the SEC.
Once this policy and awareness finally reaches a point where everyone can benefit, Jasmyn knows others will easily see the great potential Pittsburgh has always seen.
Sophie Burkholder is a 2021-2022 corps member of Report for America, an initiative of the Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Heinz Endowments.