What is a Financial Innovation Firm?
Credit: Megan Totah Design
Folks are often curious about what we mean when we say that we’re a “financial innovation firm,” so we decided to break it down.
Innovation refers to the process of creating something new or improving an existing product, service, or process to make it more effective, efficient, or valuable. It involves reimagining and introducing new ideas, concepts, methods, or technologies to solve complex problems or meet changing needs and demands. Innovation can include developing new products or services, improving processes, or discovering new ways to address social or environmental challenges. The way we’re looking at financial innovation is through the lens of reparative finance.
We are not here to perpetuate a financial system that was never designed for Black people – period.
We are committed to dismantling systemic barriers and reimagining financial policies and practices–all in the name of Black liberation. The vision for what financial institutions could and should look like requires deep innovation that prioritizes equity and justice. Innovating financial systems means creating and sustaining practices that repair broken financial structures for Black entrepreneurs and Black communities, like redefining how risk is assessed for loans, providing flexible and patient capital, not requiring a credit score or material collateral for funding, and seeing capital as a tool that can be used to heal and connect Black businesses and the communities surrounding them. It means stepping more deeply into our role as Black and Brown leaders working unapologetically in service to Black entrepreneurial ecosystems. It means placing value on transformational relationships over transactional ones.
As a financial innovation firm, we invite the banks, investors, funders, and other financial institutions we work with to come correct – that is, to be in right relationship for true partnership, equity, and the resulting systemic change to take shape. Our goal is to collaboratively develop fresh fundraising and social financing strategies. We are committed to funding Black-led social enterprises based on principles of faith, trust, and equity, as opposed to relying on mistrust and bureaucratic practices fueled by extractive financing and investment terms.
Through our work, we seek to build wealth and economic power within Black communities.
As a financial innovation firm, we also consider the larger context of economic infrastructure and zoom out to assess what other systems and structures contribute to the racial wealth gap and lack of access for Black Americans. By prioritizing the holistic needs and interests of Black entrepreneurs, we can create a financial system that serves the communities that have been historically excluded from accessing capital and other critical resources needed to thrive. We take into account the unique challenges and barriers faced by Black entrepreneurs and communities, and design financial solutions that are tailored to their needs.
Innovation requires creativity, experimentation, adaptability, and a commitment to continuous learning and iterating.
It involves a willingness to experiment, test, and refine new approaches over time, and to adapt and pivot as circumstances change. And sometimes, circumstances change rapidly – like during the height of the pandemic when we piloted a rapid emergency fund to provide a no-strings-attached 6-month Universal Basic Income (UBI) for our entrepreneur family in response to small businesses being severely impacted due to lockdown and the unforeseeable shifts COVID-19 brought about. The pilot allowed us to hypothesize whether this type of supplemental income could be curative for the racial wealth gap.
Learn more about our pilot UBI Program and other RUNWAY Labs to see how some of our innovative ideas take shape in the real world.
