Bill focuses on private investment in emerging domestic markets
SACRAMENTO, CA -Assembly Bill 1379 authored by Assemblymember Steven Bradford (D-Gardena) was approved in the Assembly Floor on Thursday, June 2, 2011 with a 51-27 vote. AB 1379 would authorize a state or local pension system to report annually to the State Controller on its investments in emerging domestic markets (EDM) and job creation in California.
Emerging domestic markets(EDM) are ethnic- and women-owned firms, in urban and rural communities, and companies that serve low-to-moderate-income populations, who have growth potential but have been overlooked due to lack of relationships with investors and even discrimination.
According to a study conducted by the Milken Institute on Emerging Domestic Markets Increasing Capital by Improving Data Collection, minority firms’ sales are growing 34% per year, more than twice the rate of all other firms and small businesses provide approximately 75% of new jobs in the nation. The study also found that African-American women firms increased by 12% annually as compared to 2% for all other firms. However, eventhough women own approximately 40% of all businesses in the US, they receive less than five percent of all venture capital. Minority owners comprise 8% of all owner firms, with Hispanics owning close to 4%; however, minority-owned firms receive less than 2% of venture capital. Rural entrepreneurs account for 10% of all businesses but receive less than 2% of all venture capital.
“AB 1379 encourages private investors to invest in geographic areas and small businesses that have historically been disadvantaged and might not have access to the same opportunities as large companies do. At this time when unemployment rates are high and businesses are hurting, it is vital to continue expanding the opportunities to these emerging domestic markets that state and local public pension funds are willing to invest in,” Bradford said. “All we need is more communication and data collection to ensure these businesses flourish to their full potential.”
The Milken Institute study, found that in the last 10 years, there has been a renewed interest by institutional investors in identifying businesses and real estate opportunities in EDMS. This growth in investor interest is driven, in part, by the recognition that changing demographics in the United States has resulted in a significant increase in minority purchasing power and business development by minority owned firms. The research concluded that EDM data collection is vital because without it business owners cannot make reasonable decisions, and investors cannot evaluate and price opportunities.
AB 1379 has been transmitted to the Senate and is waiting to be referred to a policy committee. This bill is sponsored by the Assembly Committee on Jobs, Economic Development, and the Economy.
CONTACT: Crystal Quezada, (916) 319-2051
