Business funding tells a story through numbers alone, and it’s no secret that they’ve looked bleakest for Black founders for a long time. The peak year for funding to Black founders was 2021 when they received 1.9% of deal counts and 1.2% of overall venture dollars invested in the U.S., according to Crunchbase.
There are funders, investors, and founders who are truly changing the tide. Mekaelia Davis, Chanel Cathey, and Michele Jawando, all Black women, are pioneers who are claiming their rightful place in activating economic equity by leveraging the cultural currency used to scale companies. Still, we’re still far from where we need to be for true entrepreneurial equality.
The Breakdown You Need To Know:
Capital and advocacy are key for Black founders looking to scale and grow their companies.When you need access to capital, no amount of mentorship or education is going to do you any good. Especially, when the current business economic systems are not set up for Black and brown founders to easily succeed.
CNBC Make It reported that only 2.6% of funding goes to Black and LatinX founders. When reported independently (as it should be), Black founders receive less than 1% of all VC funding. Not to mention that funding to U.S. companies led by Black founders reached $1.8 billion in the first half of 2021, per Crunchbase data, and that is a five-year high. While the dollar amount of funding to Black founders is up, it still represents just a fraction of the record $147 billion in venture capital invested in U.S. startups.
Organizations like Omidyar Network, a social change venture that works to bring about structural changes that will fundamentally shift the systems that govern our lives, is invoking a neoLiberalism economic approach to level the playing field. “What we have right now has created massive inequality. We’re trying to change the structures and conversation around woke capitalism,” said Michele Jawando, Senior Vice President at Omidyar Network.
Mekaelia Davis, the incoming director of Black Family Economic Mobility at the Ballmer Group noted what an inclusive economy looks like to sustain the Black and brown founder ecosystem. “If you can get 15% of Black-owned businesses to hire just one person, you can grow the economy by $55 million,” Davis said.
When the numbers check out, the business models are sound, and the results are booming, where is the money for BIPOC founders? The funder and investor landscape needs to change before we’ll see significant improvement in the levels of capital going to Black founders.
The narrative around what it takes to get these founders money needs to evolve as Chanel Cathey, CJC Insights CEO explains. Her strategic communications and public relations agency has led communication efforts for bipoc-owned unicorn startups with billion-dollar valuations like Esusu. Serena Williams venture capital fund Serena Ventures participated in Esusu’s $130 million Series B funding round. “Narrative development, storytelling and the power of all of that is not going to a lot of Black founders, they are not getting that kind of investment, and that’s why we’re seeing them missing from the headlines,” said Cathey.
With the number of businesses owned by Black women growing 50% from 2014 to 2020, representing the highest growth rate of any female demographic, more capital and support has to start flowing in their direction, according to a report from JPMorgan. Although the tide is changing, Black-founded businesses have been, and always will be, the standard for the current wave of cultural currency flowing through our economy.