Q & A

We recently sat down with Martina Edwards to find out more about her passions, her calling, and generally dive in deeper to get to know her.

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What are some of the biggest challenges you’ve faced in your work over the last few years?

As an organization focused on small businesses, we were first dealing with the human side of the pandemic. We had to reckon with, at that time, being only a 20-person organization and figuring out how to get all our staff working remotely so that they could be present for their families and, in turn, we could be available to our clients.

ACE has delivered more impact ($70 million in capital) since the start of the pandemic, during a period of historic challenges, than in our first 19 years combined. This has supported over 1,300 small businesses to create or retain nearly 10,000 jobs. Our key challenges are managing rapid growth – human capital, technology and infrastructure capacity, as well as maintaining adequate liquidity to meet the volume of demand. We created a multitude of programs through our Relief, Recovery and Reinvention program that met businesses where they were. From emergency and Paycheck Protection Program lending to concessionary rates and earned payment forgiveness, we stood in the gaps with not just capital but also business advisory services and connections to ecosystem resources.

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Developing alternative business models to the startup status quo has become a central moral challenge of our time. These alternatives want to balance profit and purpose and put a premium on sharing power and resources.

Why is getting investments in this alternative model crucial for those who seek it?

Alternative models also incorporate power shifts. They entrust and empower those that understand the solutions via lived experiences to develop them. Within the collaborative a group came together to write a black paper honing in on real estate developers. It highlights structural barriers, as well as solutions that would support those developers on their path to build wealth within communities.

For ACE, one of the keys to alternative business models is to stop looking at just criteria on paper. Part of the work we do is to understand the story of small business owners and then work more often towards a yes versus a no - starting with a less rigid credit box than a bank when it comes to credit, loan to value and debt coverage ratios. ACE utilizes multiple levers to ensure we bring solutions that meet the needs of diverse small business owners whom we serve. As an example, we use flexible financing, concessionary rates and credit enhancements such as loan guarantees for borrowers that may have insufficient or simply no collateral.

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How do we shift the narrative about the role of capital in BIPOC communities and reframe the perceptions of the risk involved?

So, this is a massive question and there are a number of ways to slice it, but I would say follow the data, continue to amplify stories that are in direct contrast to those perceptions, and dismantle broken systems.

There are nearly 1,500 CDFIs across the country and we all have data illustrating that our process works and our default rates are historically lower than traditional banks. There are member organizations like the Opportunity Finance network and Association for Enterprise Opportunity that also point to this. Unfortunately, even with research, conscious and unconscious bias exists. When it comes to financing businesses via debt or equity challenges are also structural. Disinvestment in people and places was a part of policies and procedures set up to prevent certain communities, particularly black and brown, from thriving. That’s the reality of our country’s history. Many of the policies and parameters for credit or underwriting still exist within our banking system, the federal reserve bank of Atlanta conducted a study showing higher declination rates for persons of color and women. If approved the funding was often lower than requested and at higher rates. For an entrepreneur, this constrains capital and places a ceiling on their growth. While CDFIs and philanthropic organizations can aid in giving borrowers traditionally overlooked and undervalued a chance when others can’t or won’t, real transformational change requires dismantling broken systems that don’t support equitable access for all.

Here is an example: There are countless studies and white papers that highlight diversity of thought and founders are a value add. As an investor in and an advisory board member of a venture capital fund, I believe that you have a fiduciary responsibility to evaluate all opportunities that have the potential to deliver returns. However with less than 4% of all capital raised going to women and less than 1% to Black founders, the statistics illustrate that white men have historically and consistently benefited. Why? They are given more grace around risk.The person on the other side of the table relates to them culturally and the problem they are seeking to solve versus when a person of color or woman pitches their theory of change. The irony is that the very nature of the industry is high risk, high reward. In an asset class where eight of ten VC deals are expected to not perform and even go under, it always baffles me that risk when looking at similar deals, penalizes the diverse founder at a greater propensity than their white counterpart.

My last take is the 800-pound gorillas at federal or state levels. For the first time in history, under this administration they disaggregated federal contracting numbers around minorities, which encompasses multiple races, ethnicities as well as women. When you disaggregate the data, you realize that white women were disproportionately getting the benefit in the minority bucket. So, we have to accelerate and catalyze the groups that have been disenfranchised for hundreds of years. One way the federal government is now doing this is their commitment to increase the percentage of contracts to Small Disadvantaged Businesses from 5% to 15% by 2025. The results will produce economic benefits for those businesses and communities they serve, as well as jobs they’re able to create.

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What are the top three pieces of advice you would give to BIPOC entrepreneurs, who are dedicated to both purpose and profit, as they are starting or scaling their business?

1. You need to have intestinal fortitude just to be an entrepreneur. Have a community around you who understand your path because it is not an easy journey to go along. You want to make sure that you have mentally prepared yourself to do what you need to do.

2. Make sure you hire the right team, if you’re at that point. You want people around you that believe in what it is you’re doing enough to help you grow your business in the way that it needs to grow.

3. Figure out your path to profitability, understand how you generate revenue, ways to create additional streams, and then find ways to partner with organizations, or other entrepreneurs who are adjacent or align with the work you do. I recently heard someone say “be bold, be brief, be gone.” What she meant by that is quickly being able to articulate the message about what it is that you do–try to tap into some point of connectivity with the person on the other side of the table.

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What is the call to action for investors who seek to promote social justice through investment solutions?

I think the call to action is actually just to do, there is a lot of talk. You’ve got to actually move from ideating and move into execution of culturally centric solutions. Get proximate to communities and the ecosystems, like really get close to that work, and identify the three to five things that you can add/support to make a real quantifiable change. Find unique ways to really get involved. Anybody that is seeking to work around social impact, use the power of your own agency, whether you are an individual or your corporation to actually affect the change. Patient capital be it equity or debt and loan guarantees are some examples, as well as policy change. Seek organizations that have a track record of meeting the needs and are aligned with your values.