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Amid the nationwide protests against systemic racism and police brutality that took place in America in June 2020, PayPal pledged $530 million to support Black-owned businesses and minority communities in the U.S. DealBook’s Michael de la Merced got the first look at the latest part of its initiative.
PayPal will invest more than $50 million in eight Black- and Latino- led venture capital firms: Chingona Ventures, Fearless Fund, Harlem Capital, Precursor, Slauson & Co., Vamos Ventures, Zeal Capital Partners and one fund yet to be named. The company picked them after interviewing more than 60 firms, all of whom applied through PayPal’s website.
PayPal declined to specify how much money each will receive. It follows millions in grants that PayPal has given to Black-owned businesses affected by the pandemic or protests and Optus Bank, a Black-focused lender.
PayPal had been thinking about how to erase the racial wealth gap, something that other companies have also addressed, and hit upon supporting Black- and Latino-led venture firms. These investors provide crucial capital to entrepreneurs at a stage that PayPal itself can’t, it invests in Series A fund-raising rounds and later and are focused on businesses that bigger venture firms have largely ignored.
“So little venture money goes into minority communities,” Dan Schulman, PayPal’s C.E.O., told Michael. “This is a way to think about how we start to create wealth creation.”
PayPal will give these venture firms an instant boost, becoming a top investor. The investment “certainly moves the needle in terms of what we’re trying to do,” said Austin Clements of Slauson & Co. Samara Hernandez of Chingona added: “This is how we’re going to create structural change.”
“But corporate America must do more to help fight racial inequality”, both investors said. “A lot of it is just P.R.,” Ms. Hernandez said. Mr. Clements added that he and other fund managers were worried about racial economic equality fading as an issue. “We don’t know how long people will pay attention to this,” he said.
PayPal hopes others follow its lead. As many companies agonize over wading into politics and social movements , Mr. Schulman said that he believed companies have a moral obligation to act. “Values that are just on a wall are just propaganda and are worse than having no values at all,” he said. “I don’t think we can stand aside and hope that the problems of our society are just addressed by governments and nonprofits.”
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