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Black entrepreneurs fight back against 'woke loans' claims following SVB failure

Black founders are speaking out against SVB critics who blame them for the bank failure.

Black entrepreneurs fight back against 'woke loans' claims following SVB failure
Photo by Lili Popper / Unsplash

Attempts to discredit bankers who believed that bridging the racial divide was good business are continuing as the blame for the failure of Silicon Valley Bank seemingly lands on the plate of Black entrepreneurs, according to Forbes.

Some have criticized its bankers for giving ‘woke loans’ to startups, which caused the crisis. But financial records show that, due in part of Black entrepreneurs, SVB held $49.3 billion in deposits at the end of 2018, compared with $173.1 billion at the end of 2022, according to Forbes.

Jessica O. Matthews, founder and CEO of Uncharted, a technology company focused on sustainability and clean infrastructure, tried to set the record straight in a recent LinkedIn post, saying that companies with diverse founders are doing better than non-racialized counterparts.

“There's a backlash going now against Black people getting funding, or being appointed to boards, or any of the demands that existing stakeholders open up the economy in a meaningful way,” William Griffin, a Black entrepreneur and former chief ethics officer at AI company Hypergiant, told Forbes. “So anytime anything fails, they say people are being distracted by being woke, you know, the whole go-woke-go-broke sloganeering.”

Fox News also falsely claimed that SVB has donated more than $70 million to the Black Lives Matter movement.

Another Black founder also spoke out in a LinkedIn post.

Loss leaves hole for Black entrepreneurs

Disgraced CEO Greg Becker believed that Black entrepreneurs had a place in the innovation economy. But after billions in safe bond investments that SVB owned, such as Treasury securities and mortgage-backed bonds, lost value as interest rates rose, depositors panicked and hurried to withdraw their money, sending $42 billion out the door on one day — March 9. The U.S. government and global central banks have since stepped in to provide tens of billions of dollars to struggling enterprises.

Jasmine Shells, co-founder and CEO of Five to Nine, a software startup based in Chicago, said that SVB was onto something special and that its efforts were gaining more momentum.

An $11.2 billion lending program to support small businesses and lower-income home buyers was an example of this, according to Shells.

But others say its exit will leave a void in venture capital funding for Black entrepreneurs, who saw a nearly 50 per cent decline in funding levels in 2022.

“SVB, in particular, has been a leader in supporting Black organizations that founders are a part of,” Stella Ashaolu, founder and CEO of WeSolv, told Forbes. “And so, I think that their demise is going to have a reverberating impact on those organizations. It’s my hope that others will see this gap and take advantage of the opportunity.”