Minority groups have traditionally been left out of high-growth startup conversations. None are more visually absent as black women.
Black women face a unique barrier, which is rarely discussed: access to networks. Throughout my travels, I've interviewed many of the world's famous founders--and the common theme in their stories is always their access to specific circles of influence. It helps them get funding for their startups, something black women struggle to obtain.
According to ProjectDiane, only 34 black women were able to raise more than $1 million in funding for their startups in 2017. The average female founder, in general, was able to raise $5 million. Both stats lag far behind those of male founders, who raised an average of $12 million per round.
Black women are still trying to diligently have a voice in the conversation. They should have a voice in the conversation. When black women founders grow, it will improve the entire entrepreneurial ecosystem. Diverse perspectives inevitably lead to valuable business insights that can address all levels of market share.
Here are four reasons black women founders need more access to funding:
1. They can access massive amounts of buying power .
According to Nielsen, black households will spend $1.5 trillion by 2021. That's a huge audience being underserved--often, black founders are aware of the issues facing their target audiences, but a lack of funding creates limitations on growth.
Women founders also have a keen sense of awareness of the trends that impact a global market. After all, women make up 50 percent of the global population. Put the two demographics together and you can quickly see how black women can become a driving force of entrepreneurship within their communities--across just about every industry, from fashion to cosmetics and even education.
2. They're driven.
According to American Express's 2018 State of Women-Owned Business report, black women represented 47 percent of all women-owned businesses, which employ more than two million people. Also noted in the study: "Higher unemployment rates, long-term unemployment and a much greater gender and racial pay gap have led women of color to start businesses at a higher rate."
I started my first company in 2003 following a company-wide layoff near the holidays. I was fortunate enough to have access to a strong network of peers and advisors, but raising capital was challenging. With the right tools and access, black women can close the gap to meet the growth of non-minority women in similar categories.
3. They're ready to "level up."
According to the Federal Reserve, last year's average annual sales revenue for businesses owned by black women was $27,752. To me, it shows that businesses founded by black women remain at a "micro" level--less than $100,000 in annual revenue--for an extended time compared to other startups. My company has been conducting in-house research on this. We've found that black women have been the least likely group in our study to exceed $100,000 in annual sales in the last five consecutive years, while the other founders we have studied have exceeded tens of millions in profit within the same time.
Access to funding for black women founders will create more flexibility to hire staff, mainstream marketing, and fund a proof of concept to become market ready. High-growth businesses are capital intensive, which increases the value of the company and improves the ability to scale.
4. They want access to accelerated mentors .
15 years ago, without the proper knowledge, I walked into a traditional bank and expected an easy process. I was told that I did not meet the bank's requirements: I didn't have a proof of concept, demand, and valuation. I didn't have any mentors--nobody told me I'd need those things.
Black women need access to mentors, including those who may not look like them. Mentorship has a universal impact by providing founders with the guidance and support needed to avoid common pitfalls. However, for many minority groups, high level mentors are inaccessible geographically and socially. Money provides access. Black women are quite sensitive to rejection and are not encouraged to stretch beyond racial or geographic norms.
The solution: transparency.
There's a relatively new law in Great Britain requiring corporations to disclose their gender pay practices and policies toward equality on an annual basis. Researchers believe this level of transparency creates public accountability for corporate executives to address inequality.
The venture capital community can benefit from a similar level of transparency. It would force them to be mindful of gender and racial inequity. It could lead to accelerators and learning incubators built to help ambitious black women founders, while preparing them to become "investment ready."
What can you do to make this happen? Raise awareness. Participate in accelerators. Learn how venture capital firms make funding decisions, so you can adjust your business concept, if needed, to gain access to funding.
Then, get out there and grow your company.