Starting a business as a minority comes with its own set of hurdles, making it much different from the typical startup experience. Despite this, the ultimate goal of all business owners and founders is the same: to do business with more people to grow their company.
Why is this important to say?
The reality of being a minority founder is we struggle to scale our business for a few reasons –
- Lack of resources (connections and the knowledge of resources available to them).
- Lack of a community of like-minded people or a network of people with money and who are also well-connected.
- Self-esteem and self-confidence
As minority-owned founders join the local entrepreneurial community and start to uncover connections, minority-owned businesses receive a lot of support from organizations within the community. Unfortunately, oftentimes that support is in lip service. Cheerleaders are great, but what founders of startups and scaleups need are customers and money to grow.
Let’s just focus on female founders for a minute.
Women entrepreneurs are on the rise. In 2021, women started 49% of new businesses in the United States, up from 28% in 2019. This means that 42% of all U.S. businesses are now owned by women, generating $1.2 trillion in revenues. Unfortunately, only 2% of these businesses reach $1 million in revenue.
That means there are many more female founders that are struggling to grow and scale their companies, leaving us to wonder why so many women aren't getting as much access to resources or funding as men do.
As of 2019, MarketWatch reported just 2.2 percent of all venture capital goes to businesses founded solely by women. Also, while all-male-founded companies receive funding after their first-round close to 35 percent of the time, for women, that number is less than 2 percent. Yet, startups with a female founder or co-founder perform 63% better for their VC investors.
The fact that female founders are not being funded and/or supported by their local ecosystem compared to male founders must be addressed. Otherwise, where will our next generation of female CEOs come from?
As with female founders, black entrepreneurs also experience a lack of resources and funding. Studies show 97% of minority-owned businesses run into funding and resource issues when starting a business compared to their non-minority counterparts.
Despite minority-owned businesses employing about 8.7 million people, they receive half the number of investments compared to white, male-owned founders.
What can be done to create a more inclusive and equitable economy?
It's so important that we find ways to provide information, tools, and real stories from other WBE and MBE founders. This builds a stronger support network and self-confidence for minority founders.
Because the disparities related to race, ethnicity, and gender are a reality for WBE/MBE founders, we need to ask our local and state economic development bodies what they are doing to eliminate active and passive discrimination toward these businesses. By doing so, it will only elevate and create better, more economically stable communities.