The Gift of Understanding

I would like to take the occasion of this year’s Black History Month commemoration to share information which we hope will provide some understanding of the significance of Dream Exchange, the stock exchange that my partner, our team and I have devoted the last several decades of our lives to achieving, and how it relates to your life. 

Folks who grew up like me were inclined to have little interest in the financial markets, which some call “Wall Street.”  Although we had a vague notion of what a stock exchange was, we never seemed to have enough money to invest in stocks, and we didn’t really understand how it all worked anyway. We had difficulty assessing the impact of the ups and downs of the stock market on how we, and most of the people we knew, functioned in our daily lives. Accordingly, this lack of understanding made it easy for us to buy into the negative attitudes which we heard or read about Wall Street, particularly when the fortunes of those on Wall Street were juxtaposed to those of the people who were characterized as the “average person,” comprising Main Street, to whom more people like me, could easily relate. I simply didn’t realize for a long time that the fortunes of what some Main Street people dubbed as the “gamblers” on Wall Street had very much to do with fortunes of the folks that we did engage on Main Street. 

While I am embarrassed to admit it now, even though I had the amazing good fortune of working in the Legal Department for Johnson Products Company as my first job out of law school, the fact that they were one of the first Black-owned companies in American history to qualify  themselves to participate in the public capital markets, really didn’t mean that much to me.  I simply didn’t understand what that meant in the broader scheme of things. As I saw the need to assist small, Black-owned businesses to obtain financing, I spent the next couple of decades helping these businesses by focusing our attention on the more traditional avenues to funding for their companies – bank loans and a variety of government programs, including SBA and 8(a) loans, Enterprise Zone investments, New Market Tax Credit investments and Opportunity Zones.  

Unfortunately, these programs seemed to be used more effectively by persons and companies for whom they were not designed, but who could afford the legal and tax support that enabled them to use the programs to their advantage. I worked hard for years without understanding the value of having access to the stock market as an alternative, or even an adjunct, to the traditional options. It is in that context that I would like to share with you my current understanding of the importance of small and mid-sized businesses having access to the public capital markets. 

For a long time, I didn’t understand how to access available options like private equity or venture capital, which meant most companies I was trying to help didn’t know either. That kept us in a mind-set which was focused almost exclusively on debt as a financing option. While debt certainly has a place in the environment of business financing, our overwhelming reliance upon debt, because it was for so long the seemingly only option, has engendered considerable skepticism about giving up equity in our businesses. Certainly, there are also other historic realities that have contributed to our trepidation about sharing equity, but it is also clear that businesses that are unwilling to look at options that require them to share the control in their company will have set their own ceilings for growth in place. When we consider that the availability of options like private equity and venture capital tend to be heavily relationship-driven, on top of our own fears, it became clearer to me why these options remain elusive in our community. 

So, how did I learn about all these funding alternatives, and how the public capital markets play such a vital role in our national financial infrastructure and economy? And how did I end up helping to build Dream Exchange, the nation’s first minority-owned and governed stock exchange in history?  Finally, how will Dream Exchange have a meaningful impact upon the lives of people in underserved communities across America? 

Well, the answers to these questions are all stories unto themselves, and this blog is getting long. How about I make Part 2 to make it easier to digest and encourage you to check back soon to hear why?  

Will that work? Great! Thank you!  

Happy Black History Month!