August 7th 2023.
Black women entrepreneurs are the fastest-growing group of entrepreneurs in the United States, yet they face immense challenges when it comes to accessing the capital they need to start up or scale their businesses. Insufficient capital, scarce resources, and a low number of females in decision-making roles are all too common obstacles. According to a report by JP Morgan, Black female founders have an annual revenue of just $24,000, which is six times less than all women-owned businesses. Data also shows that 61% of Black women rely on their own capital to finance a new business.
It is clear that more inclusive and viable support is needed to bridge the capital gap. To help turn the tide on the lack of financing Black women face, initiatives and programs must be developed specifically for them. One such initiative is the Fearless Fund, which will launch its third annual VC summit on August 18, 2023 in Atlanta. Calling itself the first VC firm for women of color, Fearless Fund has raised $25.8 million in first-round financing and is hoping to double that in its current second fund round.
Public and private sectors are also stepping up to help. The Senate Committee on Small Business and Entrepreneurship recently issued a report, “Women’s Small Business Ownership and Entrepreneurship”, which proposes legislative solutions to provide women business owners with financing. Hyphen works with the Biden administration and partners to achieve the goals of the Initiative for Inclusive Entrepreneurship, a $100 million push to boost capital to entrepreneurs of color, including Black women entrepreneurs.
Founders First Capital Partners is one of Hyphen’s co-leads and has provided entrepreneurs with about $10 million directly and $80 million to its network of funders. 77% of the entrepreneurs Founders First supports are people of color. Kim Folsom, the CEO of Founders First, commented, “We are proud to be part of IIE to work with partners to scale innovative models we have pioneered at Founders First, shared success capital in the use of revenue-based financing methodology, to make capital more accessible to founders of color across the country.”
Small business owners can learn more about IIE and connect with approved lenders and equity firms. They can also contact their State Small Business Credit Initiative to discover more capital programs. With the right support and initiatives, Black women entrepreneurs can be provided with the capital they need to succeed and thrive.
Black women entrepreneurs face many obstacles when attempting to secure financing to start or scale their businesses, such as inadequate capital, limited resources, and a low number of females in decision-making roles. Despite this, a report by JP Morgan shows that Black female founders are the fastest-growing type of entrepreneurs, having launched 2.7 million businesses nationally. Unfortunately, these businesses tend to have significantly less revenue than all women-owned businesses, with only $24,000 earned annually. Furthermore, 61% of Black women rely on their own capital to finance a new business.
Industry watchers have raised questions regarding the sustainability of the current trend if Black women owners keep facing difficulties in getting bank loans, venture capital, investor-backed aid, and other capital stacks including credit-market financing. To combat this issue, more viable support is needed to bridge the existing capital gap for Black women entrepreneurs.
In order to address this issue, Fearless Fund will be launching its third annual VC summit on August 18, 2023, in Atlanta. This summit serves as a gateway for entrepreneurs, offering education, inspiration, and networking opportunities. Fearless Fund is the first VC firm for women of color and has already raised $25.8 million in first-round financing, with plans to double the amount in the current second fund round. So far, the firm has invested in 41 companies, with 32 of them being owned by Black or bi-racial women.
The Senate Committee on Small Business and Entrepreneurship recently issued a report proposing legislative solutions to provide women business owners with financing. Additionally, Hyphen works with the Biden administration and partners to achieve the goals of the Initiative for Inclusive Entrepreneurship, which has a goal to raise and deploy $20 million in grants to build the capacity of capital providers, raise $50 million in philanthropic program- and mission-related investments, and unlock $30 million in private capital to drive systemic change.
Founders First Capital Partners, one of the co-leads, has already provided entrepreneurs with about $10 million directly, and $80 million in its network of funders. 77% of entrepreneurs supported by Founders First are people of color.
Small business owners can learn more about the Initiative for Inclusive Entrepreneurship and connect with approved lenders and equity firms. They can also contact their State Small Business Credit Initiative to discover more capital programs. By taking steps such as these, Black women entrepreneurs can have better access to the capital they need to succeed.
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