What’s Next? Envisioning An Equitable Post Covid Economy With Tracy Gray – Forbes


This is the third post of my “What’s Next” series, in which I connect with various visionaries to see how they are interpreting the current moment, and the emergent strategy coming out of it. If the economy in the past has been a tool for systemic racial oppression — what could a post Covid-19 economy look like? As Black financial activist Jessica Norwood has posed, “What would a financial system look like that loves Black and brown bodies?”

Tracy Gray’s work has always been future thinking: she’s a venture capitalist in international markets, the former director of policy for the Los Angeles Alliance for a New Economy, and she’s even spent time working on the Space Shuttle program. Gray is the Founder and Managing Partner at The 22 Fund; which invests in tech-based, export-oriented manufacturing companies “to create clean, quality jobs of the future.” The Fund’s focus is on building wealth for people of color and women in historically underserved communities, informed by Gray’s own experience as a Black women investor in a highly white male-dominated field. She is also the Founder of We Are Enough, an initiative working towards a 2021 launch that will explicitly illuminate the power of women investing in women to create a more equitable future.

In the “What’s Next” series, I last talked to the visionary Mia Birdsong on how relationships of mutuality and interdependence are critical for navigating and emerging from this pandemic. Gray dives even deeper into interdependence — but with a wider perspective of how it impacts the world of finance and our global economy. 

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First, I think it’s helpful for readers to better understand your primary investment focus on manufacturing and exports. How do exports tie to positive social impact and quality jobs for communities of color — both right now, and in the future? What opportunities did you and The 22 Fund originally identify in this sector, and how do you imagine that changing overtime? 

We started The 22 after I served as a Senior Advisor to the former mayor of Los Angeles, and during that time the Obama administration had launched the National Export Initiative as an important economic development and job creation tool. This was because most of our companies at that time were not exporting. The economies around the world that made it through the recession, however were export-based; if you think about Germany, France, India, China, Brazil and Russia at the time. We’re a consumer-based economy. We depend on our citizens spending and we sell to each other, but companies that export create jobs faster and they usually are higher paying when coupled with manufacturing. 

So I worked with the Brookings Institution to create the Metropolitan Export Initiative. Brookings has always seen cities as the way toward change, not the national level, because they’re usually on the ground. The first city they started with was Los Angeles, and they wanted to figure out why LA wasn’t exporting. And there’s a lot of reasons, mainly fear-based: fear of others, fear of not knowing the language in a foreign market, fear of being taken advantage of, fear of not knowing the law. But even when you got through all the fear, at the end there was no capital. 

The majority of companies that export are led by people of color, it’s not rocket science — I like to say that because I used to be in rocket science – it’s just that they have some affinity or comfort with another country and they’re likely selling to their home country. So when you export the first time, it’s easier to do a second and third time. 

These companies that export are more successful; meaning they have higher revenue. And they are more resilient during the last recession — 25% more likely to survive than companies that did not export.

Once again, it’s not rocket science, it’s Business 101: when you are diversified in multiple markets, when one market crashes like ours, you’re still selling in other markets. People don’t realize this. So with exports you get job creation, when coupled with manufacturing, these jobs are higher paying, they’re more likely to have healthcare, and on average the wages are around $94k a year. They’re also more likely to be employees of color, because it’s manufacturing, which means it’s more likely to be in underserved communities — because once again, Business 101 — the land is cheaper. So the hiring is going to most likely come from those communities. And during the last recession, over 70% of those jobs were created by people of color

I chose exports because it checks off a bunch of the impacts I want to have without any tradeoffs. The only impact I’ve added is intentionally looking for women, and especially women of color, entrepreneurs. Which I don’t really have to try that hard because that’s my network. 

So that’s why we did it. Our strategy of investing in export-oriented manufacturing firms is correlated with the impact of creating clean quality jobs for the future. The reason this is important for now and the future is because for now, during Covid-19 especially, we know that at least 30% of latinx businesses are not coming back, at least 40% of Black-owned companies are not coming back…  because they didn’t have the capital to make it through this. If they would have had our capital, they would be capitalized to pivot if necessary to create the essential goods that are needed now. 

For example, there’s a company that makes antimicrobial, antibacterial scrubs… they can pivot to masks with the same material. But because they didn’t have the capital that was difficult, and they had to spend the time looking for the capital and then do the manufacturing, but if they had capital beforehand they would have been ready to pivot. Also, there is a skilled labor shortage: 2.4 million in the manufacturing sector, because manufacturing is going tech-based and tech-enabled. You need at a minimum 8th grade analytical skills, so with our investment we look at tech-backed or potential for tech-enabled so that we can upskill the “blue collar” — we need a better term — workers. So they become qualified for the jobs of the future. 

This is a “backdoor” to get these workers into the tech ecosystem, which isn’t happening now in Silicon Valley companies like Facebook and SNAP and all the other ones created by white men. It’s “be what you see.” So these workers are able to experience the tech world, and they may want to move up and possibly even create their own tech-based businesses.

That speaks to the fact that in this moment, with Covid-19 and continued uprisings condemning anti-Blackness, there’s been increased recognition of the ways the old economy failed to serve communities of color. Tech companies like those you mentioned now claim to be looking for ways to creatively invest in racial justice and equity.  Investors are now also flocking to show their support of women and people of color with their capital. As someone who has been in this work for decades, what are the major trends and gaps you’re witnessing amongst newly well-intentioned funders?  

Are they flocking? I would say they’re approaching and reaching out, but are checks being written? In my network, I’m not seeing capital moving. 

I’m seeing interest, and the few that have gotten checks were already in the works prior to Covid and racial uprisings. So first off let’s start there. This may hurt me to say this but I think people are frankly looking for their Black person. And will say “I spoke to Tracy” and then they won’t do anything. Because what is missing is that they’re not addressing the systems and structures that remain the same — and that is their advisors and consultants that make the decision for investment.

I don’t know many impact investors that do not have a wealth advisor or consultant who ultimately makes that decision. And they are the same ones that made that decision not to invest previously in people of color. They’re the same ones that put up those barriers of “you need a track record.” But we’re not allowed in the firm where you get those track records. Or “you need to have worked together as a team.” Well if you’re not allowed in the firms where you can work together as a team, how does that happen? And then they won’t be the first investor in, the anchor investor. Well if you don’t come from an industry or family where you have capital to raise the money for a fund, and everyone says they’ll come in second or third… how do you get that first money in?

Everything is a catch-22 that allows the system and structures to remain the same. I’ll tell you, inevitably someone will call me and say “we want to start the due diligence.” And it’s a young white male analyst doing the due diligence. Now, how are they going to really understand what I’m trying to do if they haven’t lived the experience, if they don’t know the problems? They’re usually just out of investment banks or business schools, and they just know their analytical skills, and they don’t know how to diligence what I do and my team. They’re not thinking about the same structures and barriers. So if you think about it, for the 20 years I’ve been in the venture capital ecosystem, the numbers have not changed, they’ve actually gone down. Then impact investors have not been the solution. So right now they have a lot to make up for.

Rachel Robasciotti and I were in Puerto Rico together — where you and I first met — and she mentioned reputational and “career risk” as something that’s really hard to get rid of and can make it really difficult for people of color to try something new. Unless impact investors give their people permission to try and do something differently, and promise they won’t have to worry about reputational risk or losing their jobs, we won’t have change. Because if they go into Blackstone or Blackrock, any of the tier one VCs or private equity firms and if it goes badly — which it does — they won’t be blamed because everyone else is there. But if they go into The 22 Fund and there’s only a handful in and we go sideways, they believe that is a risk to their reputation. 

So how do you work past that? By the investors saying we don’t care, we want you to take this risk that actually isn’t risky because all the research shows that diverse investment and first time funds leads to higher returns. There’s no real risk.

Where is the research that shows me there’s no risk investing in white men? Because we know that research does not exist. Yet we know what happened in the last recession… Those were white men.

Softbank recently announced their opportunity fund. $100m. You know how much their Vision Fund was? $100B. So $100M is .1% of their first Vision Fund. And they announced they’re not taking management fees, which communicates we are not worth your “normal” market rate investment, we’re only worth the charity.

And then you look at Andreessen Horowitz of A16… the partners donated $2m to start. $2m! Through a newly-formed  Donor Advised Fund. More charity. They have $12B under management. Softbank put more into WeWork and Uber than they put into this whole opportunity fund, and you’re telling me that we’re more risky than Adam Neumann and Travis Kalanick, who destroyed their companies? It’s insulting, these little bits they’re doing.

As I said in a recent interview with the Criterion Institute, Joy Anderson says, “Finance is not about money. It’s about power.” And women and people of color need to control this capital. Because that’s when “trickle down economics” works. You invest in a fund of funds that is controlled by women and people of color, then they invest in funds like mine that are women and people of color, and then we invest in entrepreneurs who are women and people of color. And there’s research on this too. Fairview Capital, one of the few consultants and advisors of color, have research showing that when you have women and people of color fund managers a large percentage of the investments they make are in women and people of color without even trying.

You just touched on this: There’s a lot that is never going to be the same as we emerge from this pandemic, and one of those pieces I think is how we define “risk.” What’s your sense of how the impact investing field currently views risk, and how might that actually be posing a risk for our collective future? Are there ways in which we can re-define risk for social good? 

I’m not going to focus on mainstream investors because we know they don’t want to believe the numbers. They are making money hand over fist and they created this system, so they’re not going to change the system. There’s no incentive. 

But for impact investors, what’s interesting is that they understand the impact of climate risk on their investments. Because there’s research and they go with that. But when the same research is around the risk of not investing with diversity of race and ethnicity and gender… they don’t believe it. 

You believe it for climate and are all in, but not for diversity? They believe a little regarding gender, but it tends to be investments in all white women. It’s a bias that’s structural both amongst mainstream and impact investors. And if impact investors are supposed to be the solution, they need to look deeper at their own biases. They haven’t been the solution, if for 20 years the problem hasn’t changed when it comes to the numbers. They need to look deep.  

Which entrepreneurs are going to really address climate? It’s the ones around the world who are and will continue to be most impacted by climate change. And those entrepreneurs around the world are people of color. So why are you having white people create technology around climate change that isn’t impacting them the most? 

I was an engineer. I’m logical. If it doesn’t make sense through numbers, and if it isn’t evidence-based, it just drives me insane.  

I’ve also heard you talk about the importance of paying attention to the growing global trend of wealth ownership amongst women, and what it means for our global economy. Can you expand on how our future will be shaped by women capital holders, and what we need to be doing now to ensure that transfer of wealth benefits everyone, and not just white women like you mentioned? 

The UN sustainable development goals have said increasing women’s wealth impacts the top five goals more than any other initiative. From gender violence to lack of education to climate change… it comes back to women and increasing their wealth. So we know the path to improving the world is through women, at every economic level.

I’m an engineer, I was a math major. I’m all about numbers and proof. And when I did a TEDx Talk in 2015, I saw the lack of capital that we all know isn’t going to women entrepreneurs, the lack of women investors… Yet we’re now seeing the greatest transfer of wealth from men to women – dudes die first — is currently happening. We see that women control 70-80% of all consumer discretionary spending around the world, we see that women-owned businesses are more successful on every measure of profitability and performance than men. Yet, we also see that women don’t invest. But they give a lot of their money away.

We know that investing has a higher impact on growing intergenerational wealth than charity… And then I saw that 90% of women’s capital goes back to their community and family, compared to 35% from men. That was a study done around microloans. I’m tired of begging, guilty, cajoling, shaming men into doing the right thing. Women, if they only understood the power of their wallets, they would know: we are enough.

We are enough to do this ourselves.

Women are also slightly better investors. So I thought, all we have to do is educate women at every economic level, and the reason I say that is because women in these emerging markets, frontier markets, developing markets, whatever you want to call it, they’re the ones who started the trend of women investing in others with microloans. They’ve always loaned money to each other. And it has been very successful… we in the “developed” world could learn from them. 

Our only mission as We Are Enough is to educate women at every economic level why and how to invest in women-led businesses, or with a gender lens on the public market for all the reasons I said. We, in 2021, are going to launch programs and an awareness campaign to do just that.

I’m not a non-profit person. I worked at a nonprofit, and nonprofits are hugely important. I just don’t fit in there because I’m a for-profit type person. I didn’t want to have a non-profit and I don’t like when nonprofits do the same thing as another nonprofit but just slightly better — just come together and do it together! But no one was addressing the everyday woman and her wallet. They were interested in more professional investors and creating more entrepreneurs. But that gap of talking to everyday women who control so much money around the world remained. That’s why I decided to launch We Are Enough. We hope to put ourselves out of business with this campaign where women around the world will say “We got this. Shut up. We can do it.”

Finally Tracy, what is your role right now in working toward this vision of social equity, where money is a tool for social change rather than yielded as a a weapon? And how can people join you? 

 The one thing about The 22 Fund is we haven’t had to pivot through all this. Because our strategy impacts everything we’re going through right now. We are raising a fund to address all the issues right now. At my micro level that’s what I’m doing. At a macro level, because of how hard it has been for me to raise my fund, for my friends who are on their first, second or third funds to raise a fund, I’ve been looking to address the system. Outside of my fund, I’m involved in different parts of that system. I am the treasurer and on the investment committee of a foundation endowment at a university, I see how difficult it is to invest in women and people of color because of the perceived lack of products and perceived risk. So I’m trying to work from that angle at this institution. But also I’m at the Los Angeles Cleantech Incubator, with startups who are addressing climate change, ensuring the entrepreneurs there are diverse. And then from broadening the system, once again it’s so hard for all of us to raise capital because of this lack of first money in. Again, if you create funds of funds that invest in women and people of color, this is when trickle down economics actually works. So I’m working with different people to help them create funds of funds for this reason.

As I’ve said I’m a numbers person, but I’ve been realizing how much power language has. Right now it’s hard for people to know what to say. I like to say the band-aid has been pulled off. It’s really painful but it’s letting light and oxygen get to an old wound that’s been there that hasn’t healed. I’ve been thinking of words that haven’t rang true for me for a long time and really don’t right now. The idea of resilience and using that word always around people of color… that we have to survive these different economic downturns instead of thrive… we know how to be resilient. We’ve had to be resilient since the time of our ancestors. When is there going to be a growth mentality? I want to move past resilience and impact investors and their “build back better” mentality. Build back better from what?

We have to build differently and new. I don’t want this moment that has now moved into a movement to stop here. I want to go from a moment to a movement to mainstream. That is what I’m working towards, that we need to go on the streets, we need movement building, but we can’t stop there. Because we’ve done that for years and the system doesn’t change, it just goes deeper in and more hidden. My goal is to make everything mainstream. And where I am, my lane where I know the work is in finance and investing. And that is where I’m going to continue to try to enact change, because once again to quote Joy Anderson, “Finance is not about money, it’s about power.” 

I’ll go back to why women are important. If we have more capital, we’ll put more money into the politicians who will create the policies we want to see. Everywhere you look… nonprofits run by people of color are not getting capital either. So when we build intergenerational wealth for people of color, all that changes.

That is my goal, where I’m going to stay. Building power through capital. 

Thanks to Jasmine Rashid for her contributions to this piece. Full disclosures related to my work available here. This post does not constitute investment, tax, or legal advice, and the author is not responsible for any actions taken based on the information provided herein.