Black founders only receive 1% of funding allocated by venture capital investors, causing inequalities and billions of dollars of business opportunities to be lost, according to Accenture.
To combat this, female entrepreneurs have found innovative ways to reduce the funding gap that can hold Black female business owners back from success.
The funding gap Black female business owners face
A new survey by The Black Owner and Women's (BOW) Collective found that businesses owned by minority women received an average revenue of $218,000 and minority women received an average of $67,800.
In comparison, other business owners surveyed reported gross annual sales of over $250,000, according to the 2021 Annual Business Survey commissioned by the U.S. Census Bureau.
Minority women also had to launch their businesses without the same access to capital as other founders, according to the survey. In fact, only 0.03% received third-party financing at startup level.
“The lack of resources did not impair these businesses from growing,” said Nic Cober, President of The BOW Collective. “It begs the question of where they would be if they had been properly capitalised and mentored from the start.”
Furthermore, 95% of Black women surveyed shared that they used their personal finances to launch their business – a route with an increased risk that may disqualify founders from receiving traditional business loans.
Access to funding is not the only obstacle Black female entrepreneurs need to overcome. The survey also found that almost all respondents struggled to leverage marketing and advertising to growth. Most business owners relied on client referrals and networking relationships to grow their business – only 13% used to access capital as a means for growth.
About The BOW Collective
The BOW Collective is a sisterhood of the top 1% of Black women enterprises that work to elevate business opportunities and capital resources to black women's enterprises.
There are more than 100 members of the BOW Collective, whose combined sales are expected to reach $450 million in 2023 across 25 industries. The group created more than 1,500 jobs in 2022.
The BOW Collective's members recently held its second annual event, sharing success stories, growth strategies and a spirit of togetherness from speakers such as John Rogers, Jr., Chairman, Co-CEO and Chief Investment Officer, of Ariel Investments.
Nic, who opened the event, said: “I understand the plight of women entrepreneurs because I lived it. Creating a community for women in business has been a dream of mine for years, and it is finally becoming a reality. For me, this is personal.”