Wednesday, February 20, 2019
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Sadly, Black Female Founders Receive Basically Zero Venture Capital

Brian

In “The Real Unicorns of Tech: Black Founders Women,” a recent report by #ProjectDiane, you’ll come across several startling statistics like, for example, of all venture deals from 2012 to 2014, only 0.2% (24 of 10,238 deals) went to went to black female founders.

In researching the state of black women in tech, #ProjectDiane examined over 60,000 startups and identified just 88 led by black women. Though, the bigger pictures shows that there’s been a 322% increase in the number of black female-led businesses since 1997. Today, there are over 1.5 million businesses ran by black women in the U.S. — over 100,000 of which are technical companies. Though, a lot of those companies are consultancies.

On average, black female-led startups raise just $36,000 of outside funding, according to the report. There are only 11 startups founded by black women that have raised more than $1 million in VC funding.

The report outlines solutions such as redefining entrepreneurship, financially supporting accelerators and other programs that produce and shape black female founders, and increasing black female founders’ access to capital.

Regarding redefining entrepreneurship, the report suggests people and companies in the tech industry stop sponsoring conferences that don’t have diverse speakers and create a mandate that at least 13% of annual marketing or operations budgets go to efforts that feature or support women of color.

“Years of institutionalized racism, sexism, and classism, as well as the pressures of being the ‘representative’ of an entire culture of people, has made failure a costly proposition to many potential Founders of color, especially Black women,” the report states. “Solutions must extend past the creation of scholarships or “remedial” accelerator programs within prominently white male accelerator programs and focus on an expanded definition of entrepreneurship, where calculated risks are encouraged and supported, and the goal isn’t assimilation, but valuing the potential of these markets.”

It is no secret that securing financing for black-owned businesses is very difficult, but there are alternative financing methods to get your business funding.

What can be done to improve the number of black-owned business that receive venture capital funding?

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  • Claudette Thomas says:

    This is certainly not encouraging! As a female I am paid less than a male in the same line of work. If I decide that this is unacceptable and therefore, start my own company, I might not have the ability to raise the capital necessary to be successful. So are most VC’s only interested in supporting males or white women? Either this article is a real wake up call or a true slap in the face of women of color with great ideas who lack the financing to bring them to fruition.

  • […] K Rashawn 0SHARESShareTweet Since leaving the job at Mcdonald’s, former CEO Don Thompson been very busy. Thompson has launched an investment group/accelerator named Cleveland Avenue that focuses on building new food, beverage, and restaurant concepts. Cleveland Avenue, the name reported as the street that Thompson grew up on, opened its doors last fall in Chicago. According to Crain’s Chicago Business, the company announced the opening of its first restaurant concept, a non-alcoholic beverage bar called Drink. Drink has partnered with American Outfitters located in New York’s time square serving a rotating list of 20 non-alcoholic beverages made by startups and entrepreneurs, ranging from organic slushies to fresh fruit sodas on tap.  Cleveland Avenue has also invested in a Washington, D.C., fast-casual restaurant called HalfSmoke. Thompson started the company quietly in late 2015, calling on some of his former McDonald’s colleagues to help with the launch. Cleveland Avenue last fall took over a three-story, 33,000-square-foot building at 222 N. Canal St. in the West Loop, an amount of space that perhaps signals big intentions. Additionally,  Thompson’s has also stepped up to give back to the community with the Cleveland Avenue Foundation for Education, a nonprofit charity led by Thompson’s wife Liz. The foundation sponsors efforts and make grants to organizations offering career support, education, and mentoring to urban students and young professionals of color. This is significant because nowhere is the diversity issue more evident than in the venture capital sphere, which is dominated by white men who fund very few startups founded by women and minorities: African American men receive 2% of the VC funding other startups get, while black women receive almost none. […]

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  • […] who are represented, nonetheless, usually have their ideas funded by venture capitalists (VC). A recent report, in fact, revealed that 0.2 percent of all venture deals between 2012-2014 […]

  • […] Given this, it’s almost miraculous that women of color are able to bootstrap their businesses and turn them into long-lasting and relevant brands. The funds afforded to men (and to a smaller extent) white women grant them a cushion with which to pursue that ventures, that black women are simply not granted. […]

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