By Taylor Durham
- Black entrepreneurship increased by 400% from 2017 to 2018
- 38% of all Black businesses are owned by women
Black business ownership has dramatically increased, largely in part to due Black women, who own more businesses than any other minority group. Still, access to capital is an issue that plagues minority owners, many being forced to leverage their own cash to build their companies. With investing reported to grow to more than $300 billion by 2020, why aren’t more investors willing to bet on Black?
Why This Matters: For an aspiring business owner, reaching out to a bank or credit union for a small business loan is a commonly accepted practice. In fact, most businesses need the loan in order to secure the necessities required to get started (equipment, location, supplies, etc.). A business owner can face many challenges, but none has been more challenging to Black business owners than financing.
A 2019 Small Business Trends report found that more Black business owners, 41% leverage cash to fund their businesses than other small business owners at 32%. The report also noted that nearly half 47% of Black business owners are running their business by themselves compared to 33% other business owners. This barrier hasn’t stopped entrepreneurship from proliferating and thriving in the Black community, as Black millennials account for 23% of small businesses compared to the average of 18%.
Black millennials account for 23% of small businesses
Today, alternative forms of financing, such as crowdfunding or investing, have become more frequent in comparison to traditional financial means. In an effort to provide access to funding, local and state governments have stepped in to create new initiatives to aid Black startups. It’s a notable effort but it doesn’t do much to help overall.
Situational Awareness: In order for Black entrepreneurs to truly thrive in the small business space, the inherent biases held by venture capitalists and investors needs to be called out. At the rate that Black small businesses are being created, there’s a tremendous ROI opportunity for investors.
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