Business, Columns

Forging an Inclusive Economy that Supports Small Business, Micro Enterprises

By Cleve Mesidor | Bitcoin, Crypto & Tech Columnist

Cleve Mesidor, cryptocurrency, Haitian-American business
2019 Congressional Briefing of Women of Color in Blockchain on Capitol Hill. Courtesy of Cleve Mesidor

Women of color make up the fastest growing demographic in crypto. They are building products and services leveraging blockchain technology. Their micro enterprises are the small businesses of the 21st century and fuel the cryptoeconomy. These independent contractors, startup founders and solopreneurs make up a large segment of the marketplace. 

Mom-and-pops and brick-and-mortar entities are also innovating and tapping emerging technologies, like blockchain, to solve problems and optimize their business to compete in the fourth industrial revolution.

However, these groups are a blind spot in policymaking. Regulation intended to curtail big tech and large corporations is stifling the growth of these micro enterprises, which are the engine of America’s economy.

That’s why I created the National Policy Network of Women of Color in Blockchain – to advocate for inclusive tech policies. Digital equity is a national priority. According to a recent article in Politico:

Nicol Turner Lee, the director of the Center for Technology Innovation at the Brookings Institution, said it’s “not normally been the case,” particularly for the FTC and for OSTP, to have a diverse cast of leaders steering decisions. That’s led to policymakers in the federal government missing perspectives about how technology intersects with race, ethnicity and other identity markers, Lee said. 

“Diversity in political appointments, government agencies — and corporations, for that matter — fill the blind spot that these organizations have when it comes to addressing the particular needs of underserved communities,” Lee said.

Federal regulators miss the mark, small businesses suffer

America needs new policies that empower innovative micro-enterprises to build, scale, and thrive right here in this country.

In the wake of the widespread proliferation of bots disseminating fake news, racial profiling concerns in artificial intelligence, data breaches, privacy breakdowns, trust in tech giants — Facebook, Apple, Amazon, Microsoft, Google, and others — has been broken. Washington stepped in to attempt to protect the public, but officials have become extremely hyper vigilant – painting all tech with the same broad brush. 

Instead of robust federal allocations to foster the growth of micro enterprises, what we’ve seen at the federal level is strict regulation to curb the emerging innovation economy. Even some attempts at revitalization have missed the mark.

The 2020 Paycheck Protection Program (PPP) is an example. The $2.2 trillion coronavirus stimulus bill signed into law in March 2020 set aside $349 billion for the new small business loan program. It was supposed to also support minority businesses and self-employed individuals because the pandemic shutdown left small business owners across urban America in dire straits. 

There was a lot of hype about how PPP loans would deliver relief to these entities, which are crucial to a vibrant workforce even though they may employ only a handful of people. Instead, the PPP ended up being a cash cow for corporations and the wealthy. 

Talk about missing the mark! 

Banks gave preference to established businesses with which they had preexisting relationships and lenders avoided funding struggling micro enterprises. This business-as-usual approach made no sense since the Small Business Administration guaranteed the loans. Funds dried up quickly and the losers were Black and brown small and medium-sized enterprises (SMEs) that were pushed to the bottom of the pile.

Discrimination is wired into the system. People of color are often locked out of the policymaking process. Old data-sets that are not inclusive often drive decisions about federal allocations. New ideas executed on old systems perpetrate privilege and exclude a majority of the marketplace.

Crowdfunding a political casualty

The Biden-Harris Administration has inherited a deadly pandemic and economic recession. The new team will need to hit the ground running to create innovation jobs and spur small business growth. The regulatory freeze to halt 11th-hour actions by Trump officials to give the new Administration time to review these regulations is a good step. However, there needs to be exceptions to make sure micro-enterprises are not a casualty.

A week after the inauguration, Samson Williams, President of the Crowdfunding Professional Association, sent a formal letter to the White House to urge officials to exempt a rule to increase crowdfunding for micro-enterprises that was to be effective next month. Equity crowdfunding under Title III (Regulation CF) of the JOBS Act allows private early-stage companies to raise money from the general public via a security token offering (STO).

Unfortunately, the freeze applies to pending changes of the cap for Regulation CF from $1 million to $5 million and for Regulation A from $50 million to $75 million, which were on track to go into effect March 15, 2021.

The letter was co-signed by industry leaders, including myself and Dawn Dickson, CEO of Popcom. Her startup is innovating the vending machine industry and has launched successful STOs. They use blockchain technology to optimize machine-driven transactions for government-regulated products that require identification, sales compliance, supply chain information, or a combination of all three. 

We should hold the large players accountable but it should not be at the expense of micro enterprises.

Challenges of raising traditional and non-traditional capital

Governments at the federal, state, and local levels can and should remove the barriers and roadblocks that make it difficult for micro enterprises to access much needed capital.

It’s very difficult for entrepreneurs of color to secure venture capital funding. Many are building products and services to solve social problems, which may not yield an immediate return on investment. Even traditional financial institutions use red tape to weed out SMEs and prioritize wealthy corporate clients.

Through the National Policy Network of Women of Color in Blockchain, I am working on a legislative proposal to direct the Small Business Administration to create a new federally-backed 7a loan for micro enterprises that are leveraging new emerging technologies, like blockchain. This bill would open access to up to $5 million in funding. 

I will unveil more details about this proposal during the upcoming National Briefing of Women of Color in Blockchain, March 3-4, 2021, to commemorate Women’s History Month. The theme is “Small Business is the Engine of the Cryptoeconomy.”

I am optimistic about this decade of women, a decade of innovation and economic empowerment. The demographics of this nation are more and more diverse and we finally have a Congress and Administration that is on its way to looking like America. 

As poet Amanda Gorman said in her inauguration poem, The Hill We Climb: “We are striving to forge our union with purpose. To compose a country, committed to all cultures, colors, characters, and conditions of man.”

Happy Black History Month!

Cleve Mesidor

Cleve Mesidor

Mesidor leads the National Policy Network of Women of Color in Blockchain and is the author of “THE CLEVOLUTION: My Quest for Justice in Politics & Crypto.” Follow her on Twitter @cmesi. Subscribe to her weekly newsletter here. Mesidor is based in Washington, D.C.
Cleve Mesidor
Feb. 02, 2021

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