California Capital FDC Newsletter
November 2014
In This Issue
Data Spotlight: Minority-owned Businesses
The State of Minority Business in America
California Capital is a Women's Business Center
California Capital Staff: Perry Sloan
Upcoming California Capital Workshops
Quick Links

Welcome to the California Capital E-Newsletter.  Here at California Capital, we value up-to-date research on small businesses and we want to share that information with you.  In this monthly e-newsletter, you'll find an abundance of newly released data relevant to a wide variety of small business-related issues.  This month we put the spotlight on minority-owned businesses, which are vital to our state and national economies.  In this newsletter, you'll also find a list of upcoming classes offered through the Women's Business Center (WBC) and the Procurement Technical Assistance Center (PTAC).  Enjoy and we hope to see you at California Capital events and workshops!

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"New study from Pepperdine University: Minority- and women-owned businesses are much less likely to get VC funds"

October 17, 2014  

John K. Paglia & Maretno Agus Harjoto, Pepperdine University


Recent research by our team at the Pepperdine University Graziadio School of Business and Management found that minority-, women-, and foreign-owned businesses have far fewer successes raising funds from venture capital and private equity investors than other businesses.


Our study examined single round venture capital (VC) or private equity (PE) financing in order to determine revenue and employment growth (or destruction) that occurs with PE versus VC financing at small and mid-sized establishments, and we looked at what business-owner characteristics were associated with increased rates of success in securing PE or VC financing.

We found that both PE and VC financing significantly and positively affect a business's net sales and employment growth rates. However, we found that the positive impact of PE financing on a business materializes about a year after the company received funding and persists for three years after funding. Conversely, the impact of VC funding is realized immediately and lasts for about two years.


Thus, while the impact of VC funding on growth is immediate, its effects are shorter-lived than those of PE financing.

Overall, we were pleased to find that VC and PE financing could make a quantifiable difference in growth and employment to small and mid-sized businesses - especially since increasing percentages of businesses indicate that they will pursue capital and financing in the next six months.


However, we were alarmed at the extent to which a business owner's ethnicity, gender, and nationality affect that owner's chances of being funded. Minority, women, and foreign business owners were 22.2%, 18.7%, and 17.9% less likely to receive VC financing, respectively.


The low percentages are not because of a scarcity of women and minorities needing cash for their ventures. The U.S. Small Business Association indicates that women accounted for 36 percent of business owners in 2012, while minorities accounted for 14.6 percent.


A growing number of investment companies, startup accelerators, incubators, and mentorship-based programs that offer funding upon completion target women-owned and minority-owned businesses for financing. Still, the unquestionable difference in financing success rates raises the question: Does the low level of VC and PE funding reflect systemic discrimination, or does it reflect unique challenges and factors faced by these business owners, such as personal wealth inequality?


Regardless of the reasons, investors are missing a significant opportunity to better local and national economies if they continue to bypass funding opportunities for women and minorities.


American Express OPEN reports that there are 9.1 million women-owned businesses in the United States, generating more than $1.4 trillion in revenues and employing 7.9 million workers. Similarly, businesses owned by minorities produce nearly $700 billion in total sales and employ 5 million workers with an annual payroll of $120 billion. These jobs are located across the nation, with many of them in minority and economically-depressed communities.


By 2042, the U.S. Census projects that the U.S. population will be "majority minority." It is incumbent on the investment community to recognize the disparities in accessing capital, embrace that innovation and growth are driven in great part by diverse business contributions, and remove the barriers to successful financing.


About the authors:

John K. Paglia, PhD, MBA, CPA, CFA is Associate Dean of Fully Employed Programs, Associate Professor of Finance at Pepperdine University Graziadio School of Business and Management.

Maretno Agus "Augus" Harjoto, PhD is Associate Professor of Finance atPepperdine University Graziadio School of Business and Management.










Did you know? California Capital is a Women's Business Center

"Created in 1988, the Women's Business Center (WBC) Program was originally a demonstration pilot program, enacted as a part of the broader Women's Business Ownership Act of 1988 to provide 'financial, management, and marketing assistance' to women entrepreneurs.


Several years after the original demonstration pilot program was enacted, Congress reauthorized the demonstration projects through fiscal year 1997, under the Small Business Administration Reauthorization and Amendments Act of 1994.  At that time, under the same Act, Congress established the Office of Women's Business Ownership within the SBA to be responsible for the administration of the program.


The program was ultimately made permanent by the Small Business Reauthorization Act of 1997 and was subsequently reauthorized and restructured into its current form by the Women's Business Centers Sustainability Act of 1999.  The program has not been reauthorized since that time in spite of evidence that it is effective and a good return on the investment.

Today, they WBC program helps more than 100 nonprofit organizations across the country provide business training and counseling to approximately 134,000 female entrepreneurs and aspiring entrepreneurs, which includes women in underserved communities, each year.  It remains the only authorized business training and counseling program within SBA statutorily purposed to serve socially and economically disadvantaged women" (Pages 26-27). 


Source: "21st Century Barriers to Women's Entrepreneurship: Majority Report of the U.S. Senate Committee on Small Business and Entrepreneurship." July 23, 2014. Maria Cantwell, Chairwoman. Revised Edition v. 1.




California Capital is excited to introduce one of our Procurement Counselors, Perry Sloan! 


Perry Sloan is a Procurement Counselor at the California Capital PTAC.  His responsibilities include serving as instructor for workshops related to government contracting and providing individual client counseling to small businesses regarding government procurement.  He also interfaces with other business assistance organizations in the state. 


Perry has over 30 years of experience in federal contract management, both on the buying and selling sides.  This experience includes cost estimating and proposal preparation, cost/price analysis, logistics procurement, negotiations, project management, and contract administration.  He has a Bachelor's Degree in Business Administration and a Master's Degree in Procurement Management.  He is a Fellow member of the National Contract Management Association (NCMA) and a Certified Professional Contracts Manager (CPCM).

Perry has also had extensive experience teaching contract management and related topics.  He served as an instructor during military service and has developed curricula and taught courses at three different universities.  He has also developed curricula and taught courses for corporate and public agency clients.  









December 2


9:30 am - 11:30 am

Small Business Marketing

CA Capital WBC


December 4


9:30 am - 11:30 am

Responding to Invitation for Bids and Request for Proposals



December 9


9:30 am - 11:30 am

SBA 8(a) Contracting



December 9


9:30 am - 11:30 am

Business Loan Readiness

CA Capital WBC


December 10


9:30 am - 11:30 am

HR Management for Small Business

CA Capital WBC


December 11


1:00 pm - 2:30 pm

Business 101

CA Capital WBC


December 16


9:30 am - 12:30 pm

Project Management for the Small Business Government Contractor



December 17


9:30 am - 11:30 am

Federal Contracting 101


See our website calendar for more webinars and events.
Thank you for reading our first e-newsletter!  We hope to see you at California Capital events and workshops.