(Updated Feb. 4) Fairfax County is exploring the possibility of using public money to help fund new startups, particularly those from underrepresented entrepreneurs.
The county government has proposed a two-year pilot program called the Fairfax Founders Fund, where young businesses would get up to $50,000 in grant money.
The program could reverse a competitive disadvantage for the county and fill a gap that traditional angel investors have avoided, providing fairer levels of capital to Black- and female-owned businesses, county staff suggested at an Economic Initiatives Committee meeting on Tuesday (Feb. 1).
“People of color don’t have the same access,” Fairfax County Board of Supervisors Chairman Jeff McKay said. “We believe that is wrong. We believe that we can get a better cultural and social return on investment.”
First proposed in July 2021, the pilot program is still being tweaked but could go before the board for approval this spring.
While celebrities such as Pharrell and Serena Williams and companies like Wells Fargo have sought to change that funding landscape, Fairfax County Economic Development Authority Vice Chair James Quigley said, in general, that money is not going to early-stage businesses.
Officials also said that Black and women-owned businesses are underrepresented in investment opportunities, with the D.C. region far behind other states in drawing venture capital dollars.
According to the staff presentation, new Black-owned businesses start with just a third of the capital granted their white-owned counterparts. While 12% of the U.S. working population is Black, they only constitute 2% of startup executives.
Latino individuals constitute about 18% of the country’s working population and just 3% of startup executives.
In comparison, 79% of startup executives are white, even though data indicates that businesses with ethnically diverse leadership teams tend to be more profitable.
As currently proposed, the Fairfax Founders Fund would be open to for-profit technology companies based in Fairfax County that have earned up to $250,000 in gross revenue over the past 12 months. The business would match the county’s investment.
Staff have proposed devoting $500,000 to the program from the county’s Economic Opportunity Reserve, which was created in 2017 as part of its efforts to stimulate economic growth. The county would also not get any kind of ownership in the companies.
However, officials caution that the program will require some patience from the county. Quigley, who cofounded the Reston-headquartered tech company GoCanvas, said there won’t be a Google startup coming out of it in three months.
Lee District Supervisor Rodney Lusk expressed excitement about the program.
“We do need to make Fairfax County a bit more competitive, and this program is going to be able to help us do that,” he said.