2020 has been filled with crises on different fronts. Americans have dealt with the health crisis of COVID-19, a polarizing election, and also a racial reckoning due to a spotlight on the injustices faced by people of color, all in a matter of months. Though each of these is significant on its own, it is the racial reckoning that has caught the attention of many Black women entrepreneurs.
Many of these entrepreneurs have witnessed firsthand the difficulties that lay in starting a business, while also becoming familiar with the inequalities they must face when deciding to start their own ventures. This begins with access to investment capital. While businesses owned by women of color have grown significantly as compared to previous years, access to much-needed funds has not increased in the same manner.
According to a recent article on CNN.com, "The number of businesses owned by Black women grew 50% from 2014 to 2019, the fastest growth among all female entrepreneurs, according to American Express projections based on Census data. Black women make up nearly 14% of the female population in the US, but 42% of all new women-owned businesses during that time." Unfortunately Black women only received "less than 1% of venture capital funding, analyzed by ProjectDiane since it started tracking the data."
While that statistic is staggering, it makes sense considering the fact that "Only 4% of the VC workforce is Black, and only 3% of the people actually leading investments are Black, according to data from the National Venture Capital Association."
This leaves many women of color who desire to start their own businesses in a precarious position: continue to devote time and attention to focusing on seed money and angel investors who may not see the value in their business, or use their own personal capital to fund their dreams. Many women have chosen to do the latter, though this statistic only further illustrates the racial inequalities Black women face.
"31% of Black women business owners rely on personal funds to finance their businesses, whereas only 16% of nonminority women business owners say the same."
Fortunately, the increase in the number of businesses owned by women of color has been accompanied by an increase in women who have been able to acquire a significant amount of seed capital.
"According to ProjectDiane, at the start of 2018, just 34 Black women had raised $1 million or more in outside investments for their businesses. But now, in data tracked through August 2020, more than 90 Black women have hit or exceeded that level."
Whether this change is a direct reaction to the racial reckoning taking place within our country, is difficult to say, but many are more concerned with ensuring that the trend continues. There are now companies that focus on Black women entrepreneurs, while others have simply made it a point to make investing in these women a general priority.
Investment groups such as Jay-Z's Marcy Venture Partners and Unilever's New Voices Fund have made it a point to grant much-needed access to capital to these trendsetting minority female business founders.
"Companies like The Honey Pot, The Lip Bar, and Mielle Organics, all of which are now available in Target stores, were able to expand in part due to those investments."
Odyssey Media salutes Black female entrepreneurs and the companies willing to invest in their visions. It is our hope that the progress made by the racial reckoning of 2020 has long term effects, allowing more Black women to venture out and bring their dreams to life.