This post comes from the perspective of Autumn Adeigbo and Dave Darsch.
As a black female founder based in progressive NYC, I always assumed that race and gender were not something that would have a significant impact on my entrepreneurial success. But statistics show that gender and race are impacting when I pitch my business at investor panels and conferences. It's time to ask ourselves difficult questions: why is this happening, and how can we change things so black female entrepreneurs get the opportunities they deserve?
1. Double discrimination
The data shows that founding teams with women on them outperform all-male teams by a whopping 63 percent. African-American women founders, in particular, are highly qualified and have a hunger and drive for success. Black women are the single most educated demographic in the United States, and the fastest-growing group of entrepreneurs in the country.
But the numbers show that all female-led ventures are underfunded, with black female founders suffering most. Only 2.7 percent of all venture funding goes to women CEOs, and it's much more difficult for female founders to win investment at both early-stage and seed-stage funding rounds. And when women do get funding, on average they only get 25 percent of what they asked for--while men on average walk away with over 50 percent of the funds they request.
But the situation is even worse for minority women. Black female entrepreneurs get a paltry 0.2 percent of total venture capital funding, and experience significantly greater difficulties securing credit and lending. If black women founders do manage to beat the odds and secure investment, they are looking at an average raise round of just $36,000, just one third of the capital raised by white male founders (on average, $1.3 million).
2. What's going on?
The problem is severe. It's also complex, based on structural bias at multiple levels of the business ecosystem. Women in general are often left out of funding booms due to hidden biases and old, traditional models that only invest in the (white, male) demographics they are used to.
There is evidence that investors have internalized social bias, and trust female founders less. While women entrepreneurs seeking funding are grilled on "prevention-oriented" questions about their credibility, responsibility and security, men are asked more "promotion-oriented" questions that show faith in their ability to achieve on their hopes and ideals. The upshot of all this? Women get less funding, less often.
And minority women are the ones who suffer most. The business world is still homogenous, and black women are not adequately represented throughout this world as either entrepreneurs or investors. This means investors, who may have never seen a business successfully run by a black female founder, have no point of reference to feel comfortable with the risk. It's a vicious cycle that makes change difficult.
On the investment side of the table, only 7 percent of senior partners at the top 100 venture firms are female. And black female entrepreneurs say they almost never pitch to investors of color. Black women lack the contacts and "social capital" that put them on the inside of the investment world. That means they have to break into predominantly white, male networks to gain capital.
3. Building a brighter future
Change is difficult--but not impossible. It is vitally important that we raise awareness of this problem, commit to understanding its roots, and, most importantly, work to build a better future for women entrepreneurs.
Black female founders who have managed to raise significant investment give some ideas. Kristina Jones, co-founder of Court Buddy, is the 14th-ever African American woman to raise over $1 million for her startup. She advises entrepreneurs in her position to focus on building a strong network, reaching out to as many investors and successful founders as possible. She also reminds founders of the importance of finding a lead investor who believes in your company, and is willing to fight for you.
But it's clear that the larger social structure is what really needs to change. VC funds could allocate specific funds (or portions of funds) to investing in black female founders, to redress the balance. Investment firms need to have more diverse associates and partners. Minority founders may need extra advice, support and media championing to make up for years spent on the margins. When black female founders can access fair funding opportunities, and use their education, ambition and skill to build stellar companies, the whole business ecosystem wins.