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Black Female-Founded Companies Need Funding, Not Accelerators Or Incubators


During the 2008 Great Recession, the number of companies Black women started from then to 2018 shot up 163% – 10 times the growth for nonminority women-owned companies. Impact investing advisory firm Cornerstone Capital Group cites that minority and women-owned businesses were massive job creators and stabilizers of the economy following the 2008-2009 recession, adding 1.8 million jobs in 2007-12. 

Although enterprises owned by women or people of color were more likely to shutter during the Great Recession of 2007-09, they helped stabilize the economy during the subsequent recovery, adding 1.8 million jobs in 2007-12. In other words, Black female entrepreneurs helped stimulate America’s economy during a time of financial crisis. 

Some organizations are committed to providing education to Black female entrepreneurs via a startup accelerator (fixed-term, cohort-based programs that include mentorship and educational components) or incubator (an organization that helps startup companies and individual entrepreneurs develop their businesses). However, few offer venture capital financing. In ProjectDiane’s State of Black & Latinx Women Founders report, it was shared that just 0.27% of total venture capital investment between 2018 and 2019 went to Black women. This is alarmingly disproportionate since: 

  • Black women represent 12.9% of America’s population.
  • 35% of Black business owners are women, compared to just 27% of female-business owners of other racial identities.
  • 17% of Black women are in the process of starting or running new businesses (compared to just 10% of white women and 15% of white men).

Earlier this year, two successful Black female entrepreneurs discussed this very topic with Attentive. Both Amanda Johnson, co-founder and COO of Mented Cosmetics, and Kimberly Lewis, co-founder, and CEO of CurlMix, experienced challenges in raising venture capital funding. In 2017, Johnson and her co-founder were only the 15th and 16th Black women to publicly raise over $1 million in capital. In just one year, CurlMix went from making $1 million in online sales to $5 million. Yet time and time again, investors told her they weren’t sold on the idea.

It appears the fail in funding for Black female companies is not the much-touted “pipeline” or “lack of education” issue but symptomatic of investors retreating into their networks for deals. 61% of Black women must self-fund their total startup capital– debilitating for members of a community already burdened with debt and low collateral.

Black female entrepreneur Tori Soudan is the owner and designer of an Italian-made shoe and accessories brand. She has been invited to and participated in accelerator programs for the past decade. However, Soudan’s greatest challenge is identifying funding to grow her business.

“I started my business with personal funds, and I recognize that it will require additional resources to scale effectively,” Soudan explains. “Although I believe that accelerator and incubator programs are beneficial, I already have a solid business background. I have an MBA degree and taught business at the university level for several years.”

Similar to Soudan, more than three-fourths of Black women entrepreneurs have at least a college degree. Sharon Vosmek, the CEO of Astia, has heard similar stories from other Black female entrepreneurs. Astia is a global not-for-profit organization built on a community of experts whose goal is to ensure the success of women in high-growth startups. “Of the negligible amount of funding female entrepreneurs get, even less goes to people of color. This is because at every stage of the investment process – deal sourcing, analysis, and investment, venture capitalists (who are often white men) rely on these networks ingrained with bias,” Vosmek explains.

According to The Hamilton Project, there has never been such a severe GDP decrease as the one spawned by the 2020 recession. Gross Domestic Product (or GDP) is the market value of all final or finished goods and services produced within a country’s borders during a specific time period. GDP is an indicator of a country’s economic health, calculated by adding personal consumption, private investment, government spending, and net exports.

We need Black female entrepreneurs to increase per capita GDP and once again stimulate the U.S. economy as they did during the 2008 Recession. Yet as our nation’s economy is once again faced with challenges, this community of entrepreneurs isn’t receiving the financial support they need to keep their businesses afloat. Black women are more likely to cite access to credit, denied loans, and higher interest rates as a challenge.

Furthermore, when the federal government vowed to support these women during the pandemic through the CARES Act, only 2% of Black-owned businesses received loans. The application process was run through commercial banks, primarily benefiting those companies with existing relationships. 

In a press release from grantmaker The Rockefeller Foundation, Senior Vice President of the Innovative Finance Initiative Maria Kozloski states: “The pandemic has shed light on the long-standing financing issues that disproportionally impact minority-owned businesses. We have reached a critical inflection point exposing the urgency of leveling the capital access playing field for these businesses which are key engines of growth in their communities.” 

Our economy is dependent upon the ability of Black women entrepreneurs to grow and sustain their businesses. This means venture capitalists and the finance community must address resource gaps and biases and improve finance practices that prevent these women from securing capital.



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