On June 14, Base10 Partners, the largest Black-led venture capital fund, announced a new partnership with Student Freedom Initiative to help expand investment options for specific Historically Black Colleges and Universities (HBCUs) with which the nonprofit is already collaborating. This partnership builds on the Base10 Partners’ Advancement Initiative that works to fund scholarships for minority students through investing in pre-IPO companies.
HBCUs have faced barriers when trying to gain entry into venture capital investing, including “limited investment capital, smaller endowments, and near term needs for capital to meet operational expenses,” the announcement stated. “The partnership will help address these barriers directly by offering no-minimum investments, no management fees, a reduced holding period and profit sharing among HBCUs. By doing so, both parties hope to help close the wealth gap between HBCUs and other universities and “build intergenerational wealth for the Black community.”
“This partnership is another example of what is possible when we are intentional and collaborative,” said Student Freedom Initiative Chairman Robert F. Smith in the press release announcing the partnership. “By specifically addressing barriers (e.g., minimum investment, liquidity, expenses, and holding period) which have typically prevented HBCUs from gaining access to alternative investments, this solution will become an integral component in addressing the endowment wealth gap between HBCUs and their white counterparts.”
Smith’s Work to Build Generational Wealth in the Black Community
Smith leads multiple initiatives that work to build strong financial futures for underserved communities. Student Freedom Initiative, for example, is a student-centered nonprofit led by Smith that helps relieve students of color from student loan debt by offering income-contingent financial alternatives. After he announced he would eliminate the student loan debt of the Morehouse Class of 2019, Smith launched Student Freedom Initiative with a $50 million contribution from Fund II Foundation, a charitable organization in which he’s founding director and President. Smith then personally matched the contribution in October 2020.
Since its creation, Student Freedom Initiative has received donations from many organizations, including Cisco Systems and The Walmart Foundation. Additionally, the program has been acknowledged and supported by the Business Roundtable’s Racial Equity & Justice Subcommittee on Education.
Smith also supports The 2% Solution, an initiative that encourages companies to invest 2% of their profits over the next 10 years in communities that have been systematically held back by the racial wealth gap. Smith began advocating for the idea after a 2019 McKinsey Global Institute analysis found that eliminating the racial wealth gap would generate $1.5 trillion in GDP. “Nowhere is structural racism more apparent than in corporate America,” said Smith about the solution. “If you think about structural racism and access to capital, 70% of African American communities don’t even have a branch, bank of any type.”
On average, families across the United States donate 2% of their income to charity. The 2% Solution calls for corporations to follow their lead and invest the same percentage of their yearly profits directly into underserved communities. Companies would be donating their resources, not money, as this funding is meant to be investments with real, tangible areas of focus.
Learn more about Smith’s efforts to grow and maintain generational wealth in the Black community.
