It takes more than a quality product and a strong management team to make a business really take off. Niraj Kataria, chairman/CEO of Diversity Business Solutions, knows there’s something far more important that an entrepreneur needs: funding. It’s the key to fueling the growth of a business, he says.
Kataria knows the ins and outs of businesses funding. In the early 1990s, he worked on initial public offerings for Gartner Group, a technology research and consulting firm in Stamford, CT., and Moldflow, a plastics solutions company headquartered in Lexington, MA. Seeing and understanding how capital gets raised gave him a solid foundation for everything else he has done since.
The experience at Gartner and Moldflow prepared Kataria well for his next step up the ladder, when he accepted the position of company president for the New Orleans-based publisher of Black Collegian and Black MBA magazines. That move, he says, was one of his most personally satisfying because he was able to leverage a Black-owned company that had been around for years and lift it to the next level.
With a bachelor’s degree in accounting and an MBA from the University of Bridgeport in Connecticut, Kataria had the experience and skills required to run a company, but his time on the tennis court also helped. During his stint in Lexington, a town without much ethnic diversity, he played tennis with a Black friend. That friend had a friend, Preston Edwards in New Orleans, who needed help raising funds to take his print-based publication, Black Collegian, online.
Kataria, 45, a native of India, knew well the struggles Black entrepreneurs face when it comes to securing bank or private funding to expand or leverage their businesses. He thought he could help Edwards, and so did Edwards after the two met and talked at length. Eventually, Kataria moved to New Orleans, becoming president of Edwards’ company, which was renamed IMDiversity.com.
Kataria developed a business plan for the company and raised $3 million from two venture funds. “One of the funds was started by the [former] CEO of Gartner Group, which gave $1.5 million,” he says. “Another $1.5 million came from Stonehenge Capital in Louisiana.”
With that infusion, hiring took off, and IMDiversity’s staff grew from about a dozen to more than 60. The company’s sales skyrocketed 500%. For Kataria, it was, “A dream come true; me running a Black-owned company.” He held the job of president from April 1999 to December 2001. “It’s one of the best things I ever done in my life.”
To this day, Edwards still marvels at Kataria’s expertise in raising seed money. “He put together a prospectus for investors and introduced us to the venture capital community,” he says. “We grew tremendously over a year and a half period. …He fit in very well here.”
After leaving IMDiversity, Kataria took over the chairmanship of Diversity Inc., a leading publication on diversity and business. There, he positioned the company to meet the needs of emerging markets and developed new products and services, including extending the Diversity Inc. brand from a Web-based product into a glossy magazine that launched in November 2002. He was involved in packaging Diversity Inc, the magazine, from concept to print.
Kataria stayed at Diversity Inc. four years. Then Hurricane Katrina hit. And that changed a lot, especially his commitment to using good business practices to do good works. He decided the people of New Orleans, so devastated by the hurricanes, needed help. And one form of assistance he could deliver was jobs. Bringing business back to New Orleans was crucial if the city were to fully recover.
So Kataria set about trying to raise monies to help Black business owners hard hit by the hurricane and floods. His goal was to start a fund with $5 million to $10 million that would help small business such as restaurants and barbershops. But raising the funds proved difficult in a city so many citizens had fled. Even a prominent businessman like Edwards found it hard to get enough ney to rebuild his home.
Still determined to bring jobs back to New Orleans, Kataria and his friend and business partner Terrence Rice started Diversity Business Solutions in 2007. This time, though, no funds came from private equity or venture capitalists. Kataria and Rice self-funded DBS with their own money and contributions from friends. DBS, while still a small company, he says, has its sights on growth. The company is “growing organically” while Kataria and Rice prospect for outside funding.
“Yesterday, I was talking to one of the venture funds. To this day, it’s tough to get funded if you’re a minority- or Black-owned business,” he says.
DBS puts together Web sites based on job channels and uses sophisticated technology to up-sell listings that draw diversity candidates. Its main clients are newspapers, which DBS attracts by showing them the advantages of selling through its network of diversity sites for a better price point and fewer transactions. Network sites target African-American, Asian and Hispanic job candidates, Kataria explains. With DBS’s package, employers can reach people from different ethnic backgrounds and from multiple locations as opposed to only those in just one city. That business model works well, he says.
In addition to having a nationwide job network, DBS’s goal “is also to created white-collar jobs in New Orleans,” says Kataria, a single father who keeps a home in Southington, CT, where his three children live.
Still, the success of the company relies on getting funding, which Kataria steadfastly believes is made more difficult for him and Rice, who is Black, because funders have typically been reluctant to back minority-owned businesses. “If this was two White boys…they’ve have funding coming out the wazoo,” he says. “Oh, God, yeah.”
Kataria believes that doing great work will pay off. One thing he and Rice don’t want to do, he says, is promote diversity while not being the best at it because that would be “another thing to slap [them] in the face.”
What is working in his and Rice’s favor, though, is their knowledge of the media industry, an understanding of how financing works and having connections. “That’s the advantage of being in the industry for that long,” he says. “We are on our way to succeeding. New Orleans is not going to attract Fortune 500. They just can’t because of the schools and education issues. But they can attract smaller companies. …If you can show them a pilot of how white-collar jobs can be created and run, then the country can see what can happen with half a million-dollar funding.
“Everybody has a chance to do well. Funding helps. If you put 10 people around a table, five with funding, five without, the five with funding have a better chance. And if the five with funding are White people, then only White people are going to succeed. So we have to find channels to fund the people at minority companies.”