Robert F. Smith: America’s Richest Black Investor Set to Revive Black-Owned Businesses amid the Coronavirus CrisisJuly 8, 2020
The COVID-19 outbreak caught most people unaware and has since left many stranded. The health and economic implications of the coronavirus are enormous. It is no surprise that many people struggle to adjust their lives and adapt to the next normal. As businesses, especially black-owned companies, prepare to re-open, they face a significant concern of business financing. For this reason, Robert F. Smith (the country’s wealthiest black-entrepreneur) is set to empower African-American-owned businesses. In his 2% plan, Mr. Smith intends to pump billions to minority-owned companies who have been affected by the coronavirus crisis.
Robert F. Smith is a renowned American businessman and philanthropist. He was born, raised in Colorado, and studied Chemical Engineering at Cornell University, where he earned his B.S. He further enrolled in Columbia Business School and graduated with an MBA with honors before joining Kraft General Foods and received two European and two American patents. Currently, Mr. Smith works as the Chairman and Chief Executive Officer at Vista Equity Partners, an equity investment firm he founded.
Over the years, Robert Smith has grown his entrepreneurship skills to become one of the nation’s black billionaires. Looking at how structural racism affects black business owners in the country, Smith came up with a plan that he believes can help finance minority-owned businesses. His plan entails asking large corporates and top tire banks to spend 2 percent of their annual earnings investing directly in technology, healthcare, banking, education, telecom infrastructure to benefit the African-American community. If this plan succeeds in the next ten years, he believes the black and other minority communities will stand a better chance of improving their lives and businesses.
While addressing the Forbes 400 Summit on Philanthropy, Smith stated that Black people and minority groups have been neglected by big banks and lack the financing needed to build local institutions and businesses. He further said that investing directly and funneling substantial capital into financial infrastructures would be the best way to boost African-Americans’ economic standards. Smith argues that while structural racism is experienced in many sectors, it is rampant in the corporate world. To justify this racism, Smith said that up to 70 percent of Black-Americans don’t have a bank or branch of any kind.
Robert Smith, 57, has spent his recent days working on a solid plan and sharing it with business leaders. The proposal argues that a 2 percent investment in the next ten years would be what black and minority groups need to turn their lives around and help restore mobility and equity in the United States. He feels that the nation’s large companies and business leaders should see the need to support the plan. Smith, who has an estimate of $5 billion in net worth, compels every average household in the country to contribute 2% of its annual income towards the plan. He also thinks corporate America can boost the plan by making donations.
Smith experienced structural racism in the banking system as he tried to assist black-owned businesses and financial institutions that serve African-American to acquire Paycheck Protection Program loans. He realized that blacks faced several structural challenges in their effort to access emergency funds given by the federal government via banking institutions.
Robert F. Smith explains that the country’s balance sheet for 4,700 banking institutions comprises nearly $20.3 trillion in assets, but surprisingly, only 20 of the institutions are led or owned by Black- Americans. Worse, they have about $5 billion in assets, which is less than one percent of the country’s commercial assets. Typically, the African-Americans make up 13 percent of America’s population. In a statement, Smith said that the ten biggest American banks’ net earnings over a decade summed to $968 billion and figured out that 2 percent of this amount would be about $19.4 billion. He said this amount could be used to finance depository institutions and community development banks that service black and minority communities.