Wealth. There are several ways to obtain it, but for many, entrepreneurship is the chosen path. We seek wealth to build foundations for our families and communities. The goal: is generational wealth. How do you build wealth? With capital. Access to capital is one of the biggest challenges that most startups and business owners face when starting and growing their business, particularly, for black women. In a study conducted by American Express, black women are leading the charge as one of the fastest growing groups of small business owners, outpacing their peers by 322% from 1997 to 2015.
Even with these impressive numbers, one of the biggest obstacles black women owned small businesses and startups face, is access to capital. Capital is essential to the growth of your business. It’s a no brainer that with the proper funding in place, you can scale quickly, hire staff, purchase more products, and create prototypes. Funding is critical to sustaining and maintain your day to day operations.
Recently, the Liberian born, mogul, Richelieu Dennis announced that he plans to invest $100 million dollars into women, led, minority businesses globally. “About six months ago, we announced that we were launching the new voices fund,” Dennis told the audience at the press conference during the Essence Festival. “I’m proud to say that we get to officially launch the $100 million New Voices Fund for women of color entrepreneurs here at Essence Festival this weekend. Over the past six months, we have already either invested in or committed to, over $30 million in black women entrepreneurs.” Through Dennis’ New Voices Fund initiative, women will have access to an eco-system designed to produce great leaders through mentorship, as well as funding their business endeavors.
Why programs like New Voices Fund matter?
According to a study entitled “Founders Funding & Exit Ranking USA,” which was compiled by GraphicSprings, entrepreneurs who received funding or an exit within the last 12 months, found that only 4% were women and 13% were minorities. The group studied about 5,000 funding announcements, company press releases, media reports and data from Bloomberg and Crunchbase from the last 12 months. It’s quiet clear, based on these findings why Richelieu Dennis’ program is necessary but also, raises an alarming reality: Why aren’t minority women receiving funding for their businesses?
Picture this, Venture capitalists invested $58.2 billion in companies with all-male founders in 2016. Only $1.46 billion in VC money went to women in 2016, according to data from M&A, private equity, and venture capital database PitchBook.
Let’s dig deeper into this.
Women lie, men lie, numbers don’t
In 2016, 5,839 male-founded companies got VC funding, compared to just 359 female-founded companies. In the same year, DigitalUndivided released the Project Diane report, which revealed, on average, $36,000 in venture funding goes to African American women. In comparison, an average of $1.3 million goes to startups owned by white men that often fail.
Be the change you want to see
We either have one or two options to change the landscape of who is investing into whom, and with what proceeds. 1. Request a “seat at the table” of the investment boards, to ensure that funding is equally distributed to minority owned startups and small businesses, or create our own initiatives by pooling resources from the community, much like Richelieu Dennis’s New Voices Fund. It can be done! Are you a minority Venture Capitalist? I'd love to hear from you about the companies you're interested in investing.
For more information regarding the New Voices Fund