Women and ethnic minority entrepreneurs struggle disproportionately to access funding and business support. This has serious implications for them, their employees and the economy. Female and Ethnic Minority Founded Businesses.
Why?
Black entrepreneurs are also under-funded, receiving just 0.24% of the total amount invested. Female and Ethnic Minority Founded Businesses.
Despite having strong teams and compelling business ideas, these entrepreneurs are largely ignored by the venture capital industry.
There are many reasons why these entrepreneurs are overlooked by the VC community. This assumption is wrong. Research shows that diverse companies are more profitable than non-diverse ones.
What’s Wrong?
When it comes to venture capital, it’s been an all-boys club for decades.
That has created a chasm between the people who are getting funding and those who aren’t.
Increasing the visibility of women of color in the VC industry is one way to address this problem. But it’s not enough, and a more long-term solution is needed. What Can VCs Do?
Changing the face of venture capital takes time and a commitment to the hard work of tackling long-standing, systemic issues. It will require a fundamental shift in mindset.
Thankfully, some changemakers are making an impact. One is Backstage Capital, which launched in 2015 with a $36 million fund reserved for companies founded by black women.
These efforts can make all the difference.
What’s Wrong?
VCs need to recognize and strip away their unconscious biases and lens of exclusion. They need to focus on assessing the quality of entrepreneurs and not just their backgrounds, genders and ethnicities.
For instance, Black women are the fastest growing demographic of business owners in America. Yet, they face disproportionate financial headwinds due to the lack of funding available to them.
Fortunately, we are seeing more VCs recognizing the importance of supporting minority-founded businesses. However, of those eight, none are female-founded and just three are Black-founded (excluding husband and wife teams). The report reveals that this trend is even more pronounced for other high-growth UK startups such as hopin and Deliveroo needs read more hear.
