How To Unleash The Most Active Group Of Founders: Black Women

The murder of George Floyd was a lightning rod galvanizing the Black Lives Matter movement and highlighting the vast inequalities that remain within our society and economy. Perhaps among the most striking of these is the widening racial wealth gap with Black families holding roughly one-tenth the wealth of white families. One key to ushering in a new age of greater social and racial equity lies in narrowing the vast wealth and earning disparities among the Black population, and Back women specifically. Fortunately, Black women make up the fastest growing entrepreneurial group, meaning that their role can play a leading part in tilting the scales to parity.

During the past few months there has been a chorus of investment firms declaring their solidarity with African Americans and even creating new funds specifically built to invest in minorities, reminiscent of the "Me Too" Movement that ushered in a wave of women-focused angel groups and venture capital firms in 2017. While this growing movement of investors is providing greater access to capital for Black women, most will still need to turn to traditional funds and angel investors who, traditionally, are slower to change and exemplify existing biases. For women founders to navigate and thrive in a rigged system — one that already puts them 20 steps behind — real, systemic change in the entire investment community, as well as skill-building programs, are required. Recognizing that change takes time, here are some steps that entrepreneurs from overlooked groups can take now.

Black women make up the fastest growing entrepreneurial group, meaning that their role can play a leading part in tilting the scales to parity.

There is a growing body of academic research showing how investors — both men and women — treat women founders differently and ask them more rigorous and challenging questions. For example, investors more often ask male founders about the upside (growth potential) of their business, whereas they turn their attention to loss prevention with women entrepreneurs. Fortunately, there are established practices that women can employ to counter bias and improve their fundraising success rate. Continuing with the above example, women founders can refocus the conversation from risk mitigation to growth potential and strategy. In addition, women-centric organizations such as Womenpreneurs have excellent resources and programs helping women founders navigate and succeed in a biased investment landscape.

We will continue to push for structural reform, but I also know that women, a force not to be reckoned with, won't sit and wait while it happens.

There has never been a better era for Black women to start a high-growth business in the United States as there are already a growing number of venture funds committed to investing in women and Black founders, including the following:

An Oakland-based fund committed to closing the gaps of access, opportunity, and outcomes for low-income communities and communities of color in the US. Within their current portfolio, nearly 60% of founders identify as women and/or underrepresented persons of color.

An early-stage investment firm that holds themselves to a high standard of investing in founders from a variety of backgrounds in terms of gender, race, academic experience and life circumstances. They are unafraid to back unproven, first-time entrepreneurs and primarily focus on the San Francisco Bay Area, New York and Toronto.

One of the leading revenue-based investment firms, Indie.vc has a strong focus on investing in both Black and women founders. Their investment instrument allows founders to maintain more of their equity by paying off the investment amount plus a multiple with a portion of the startup's revenue.

A venture academy whose portfolio companies are 50% made up of African American founders and 80% by additional underrepresented founders (other persons of color and women). This year, Beta Boom is running an academy solely focused on women-led startups with three-quarters of the teams in the 2020 Women's Startup Academy being led by Black women.

For women founders to navigate and thrive in a rigged system — one that already puts them 20 steps behind — real, systemic change in the entire investment community, as well as skill-building programs, are required.

This moment in time has been an awakening for some in the tech and investment community, emphasizing the work that still remains. We will continue to push for structural reform, but I also know that women, a force not to be reckoned with, won't sit and wait while it happens. By arming yourself with skills to counter bias and outmaneuver investors in pitches and negotiations, while also focusing on investors committed to evaluating your business fairly, Black women entrepreneurs (and indeed all women founders) can usher in a new era of economic growth and social equity.