Strengthening Pathways to Capital: The Business Case for Inclusive Growth | Global Conference 2025

Panel Overview and Core Thesis

• The panel at Milkenitz to Global Conference 2025 argues that inclusive growth requires a strategic alignment of public, private, and philanthropic capital rather than reliance on any single sector.
• Historical precedents for national vision through capital include the Transcontinental Railroad, the Interstate Highway System, and the early development of Silicon Valley via government defense contracts.
• Current economic conditions require unlocking the "unrealized potential" of rural and historically redlined communities to address labor shortages (unemployment at 4%) and sustain long-term growth.
• A central problem identified is that economic mobility has been declining since the 1940s despite GDP growth, with 50% of post-Great Recession jobs concentrated in only 3% of counties.

Capital Allocation and Structural Barriers

• Venture Capital Disparity: 75% of early-stage venture capital is concentrated in California, New York, and Massachusetts, leaving major hubs like Chicago and rural areas underfunded.
• Geographic Bias: Following the election, 85% of venture capital flowed to states won by the president, while only 15% went to states supporting the opposing candidate, despite significant innovation occurring in those latter regions.
• Fund Sizing Gap: The typical fund for a woman or person of color is under $200 million, often failing to meet the $50 million minimum check size required by large institutional investors like CalSTRS.
• Capital Stack Imbalance: Private sector capital often demands high returns that conflict with the long-term horizons needed for community development, while government resources are currently being reduced.
• Philanthropic Limitations: Recent "post-2020" capital injections into communities of color were often one-time grants with concessionary terms, which were insufficient for the longer hold times and scaling needs of these enterprises.

Sector-Specific Roles and Strategies

• Government (Walea Adeyemo): The Treasury implemented $12 billion in capital for CDFIs and minority-owned banks but found these institutions lacked liquidity, necessitating a private-sector coalition to provide it.
• Public Pension (Cassandra, CalSTRS): With $350 billion in assets and a payout-to-contribution gap of $1.5 billion/month, CalSTRS seeks diversification into private markets and emerging managers to meet its 7% return assumption.
• Family Office (Linnea Roberts, Gingerbread Capital): Family offices possess the autonomy to act as a "pointy edge" for risky bets, targeting the projected $35 trillion wealth transfer to women over the next decade.
• Philanthropy (Jim Shelton, Blue Meridian): Blue Meridian creates capital stacks of $50–100 million to fill the "scaling gap" that traditional venture capital misses, focusing on transformation rather than just supporting existing operations.
• Regional Venture (David Hall, Rise of the Rest): Advocates for using public money (e.g., SSBCI) and private capital to build local infrastructure that replicates the "network density" found in Silicon Valley for entrepreneurs in regions like Detroit and Ohio.

Systemic Failures and Future Threats

• Education and Policy Disconnect: The federal government failed to deliver on promises to retrain workers displaced by NAFTA and the shift to the knowledge economy, creating a "broken promise" that fueled economic anger.
• AI Risks: Artificial Intelligence threatens to replicate the automation's impact on blue-collar workers but applied to white-collar jobs, potentially excluding those without access to high-level technical education.
• Fiduciary Constraints: Large institutional investors are often unable to support underserved entrepreneurs due to rigid minimum investment sizes and the high cost of managing small, discrete deals.
• Workforce Development Gaps: Economic development and workforce programs are frequently siloed, preventing the alignment of job growth with local skill acquisition and career pathways.

Pathways Forward and Success Stories

• Local Capital Stacking: Successful models involve philanthropy (e.g., George Kaiser Family Foundation in Tulsa) using public dollars and private risk capital to create "buffers" that unlock traditional market investment in local communities.
• Bipartisan Cooperation: A bipartisan "Community Investment Caucus" in the Senate (including Republicans Crapo and Warner) successfully secured $12 billion for CDFIs and funding for the SSBCI.
• Place-Based Collaboration: In Berea and Louisville, Kentucky, local organizations across the political spectrum united to request state funding, receiving double the allocation due to their demonstrated cross-community partnership.
• Scalable Ventures: Specific examples of success include a veteran entrepreneur in Omaha securing an $11 million Series A for a workers' comp insurance platform and various women-founded companies in health and sports.
• Family Office Coordination: Grouping family offices to co-invest allows for leveraging smaller pools of capital to achieve scale, reducing individual risk while increasing the volume of deployed capital.

Forward-Looking Statements and Commitments

• Private sector entities are encouraged to double down on local communities where they operate, partnering with governments and philanthropists to experiment with solutions before federal reinvestment becomes feasible.
• Institutional investors are urged to reconsider minimum investment thresholds and collaborate with family offices to "wedge" into emerging managers, creating a track record that triggers further institutional FOMO (Fear Of Missing Out).
• The panel emphasizes that the next decade requires a new education infrastructure investment comparable to the levels seen in medicine and defense to prepare human capital for an AI-driven economy.
• There is an expressed commitment to viewing women as superior risk managers and leveraging the upcoming wealth transfer to women as a critical arbitrage opportunity for inclusive economic growth.