A Call for Restoration
By Alfa Demmellash, CEO & Co-founder of Rising Tide Capital, and Co-founder, Future Tide Partners
Humans are at a critical point in our history.
Old behaviors combined with new technologies are converging to create a downward spiral in our civilizations: our impact on our home planet and irreversible climate change, ever-increasing income inequality and the racial wealth gap, and massive job-loss as the digital industrial revolution ushers in artificial intelligence and machine learning to displace humans. Each of these trends on their own could create a crisis, but as they converge and disproportionately impact our most vulnerable populations, many are calling for a reimagining of our current economic system.
Over the past 15 years, we at Rising Tide Capital have worked in communities that are under-resourced. Our entrepreneurs represent these vulnerable populations; 70 percent are women, 80 percent are low-to-moderate income, and 90 percent are people of color. We have worked in these communities because we firmly believe in the potential of entrepreneurs to change their communities from within by leveraging their inherent skills and talents into business ownership. Because we know that these trends will hurt the communities in which we work, we also believe that our economic system — which has the capacity to leave so many behind — must be redesigned.
The role of Entrepreneurship and Entrepreneurs
As digital platforms catalyze the economic impact of globalization, the strengthening of local economies will be critical to the survival of underserved communities. From our standpoint, one positive trend is the high favorability towards small business owners and entrepreneurs to build not simply their own resilience, but also to layer resilience into their families and their communities.
In our experience, entrepreneurship has done exactly this. Within two years of graduating from our programs, entrepreneurs see a 112 percent increase in business sales; a 58 percent increase in household income; and a 54 percent decrease in their use of public assistance.
These entrepreneurs are not building the latest technology platforms. Rather, they are using their entrepreneurial acumen to meet the deepest needs in their communities by building strong small businesses across every sector — health, nutrition, education, sustainability, and culture.
Unfortunately, another trend we have experienced in our work at Rising Tide Capital is that businesses owned by people of color — particularly women-owned businesses — lag behind the businesses of their white peers primarily due to lack of investment. The systems exacerbating the racial wealth gap often mean that entrepreneurs of color cannot turn to friends and family to invest in their businesses, and as we have learned, just 8 percent of all philanthropy is focused on people and communities of color.
Entrepreneurs of color need access to capital alongside access to new markets to grow their businesses. And if creating a vibrant environment for small businesses will be a key strategy for all of our futures, it is time for us to ensure that we are giving our entrepreneurs every opportunity to succeed in the redesign of our economy.
What is Restorative Investing?
Restorative Investing builds on the successes of impact investing by reimagining a new path for activating our full potential, addressing urgent challenges, and transforming communities and the planet we share. The concept is an evolution of the leadership of Paul Hawken, Charles Eisenstein, Nwamakah Agbo and others who have passionately demonstrated why we need a new economy, and were the first to explore how “restorative economics” might come to life by ensuring that investment is intentionally made in the people, communities, and situations that need it most urgently.
At Rising Tide Capital, restorative investing looks like integrating targeted capital investment in communities and local entrepreneurs as well as providing business training and ongoing support. As a nonprofit, we attract and allocate funding for training programs focused on day-to-day business management, capacity building, future-readiness, and ongoing coaching and mentoring. When the entrepreneurs are ready, we also provide funding in the form of grants and access to low-interest financing in support of business expansion and sustainability.
If leveraged well, this philosophy has the capacity to restore communities from within. It is wealth creation for communities, by communities. We have seen how it can equip all of us — from entrepreneurs and advocates to investors and philanthropists — to heal and solve some of the biggest challenges facing our communities.
As we reflect on the lessons we learned from our recent purchase of a building, as well as the lessons we have learned over the past 15 years of working with thousands of entrepreneurs, we believe the recipe to our community’s success has been due to restorative investing. Attracting a diverse audience of philanthropic, impact investors with a keen understanding of the critical need for our work has been challenging, but ultimately rewarding. It is also the aspect of our experience that may have the most to offer to those who are now seeking to attract investors who align with restorative values — particularly those catalyzed by the pressures and hopes around Opportunity Zones.
A Call to Action
The work we see ahead is grounded in the restoration of our humanity — we must reevaluate what it means to be connected to each other, and to our planet, in order to ensure our very survival. We welcome those seeking new ways to leverage financial, cultural, and knowledge capital on a journey together to nurture a sense of common purpose. As we investigate new ideas together, we will find ways to activate all forms of capital in service of holistic, inclusive, long-term solutions that address the scale of the challenges we face.
Restorative Investing embraces a philosophy that is:
•Restorative: engages all stakeholders — from entrepreneurs, advocates, and community members, to government, investors, and philanthropists — to heal and solve some of the biggest challenges facing our communities and planet.
•Regenerative: creates new value and generational wealth, honors land and people, and is grounded in knowing there is more than enough for all of us.
•Redemptive: recognizes that each stakeholder has a unique role in building the new models and systems we will need for a sustainable economy.
We believe that entrepreneurs around the country have the capacity to heal their communities from within. Over and over, we have seen that our community of entrepreneurs is talented, creative, and resilient. They are more than capable of solving big problems and transforming their neighborhoods when they have access to resources and support networks. This presents an opportunity for restorative investors to nurture and uplift indigenous solutions and organizations.
We invite you to join us on our journey to reimagine the future of human flourishing.