As we start Black History month, this is still on a lot of our minds. Black Americans make up over 13% of the population & make up a tiny portion of the tech workforce. Black-founded companies receive just 1% of venture funding—and the disparity has only widened over the past year.
Black founders are under-represented among high-growth, innovation-pursuing startups, & there has been only slight growth in the share of Black-founded startups over time. In the last decade, less than 2% of the 400 U.S. startups businesses had Black founders, according to an McKinsey research.
One alarming thing that’s an issue (when it comes to funding) is that more than half of the loan applications of Black-owned businesses are rejected, more than any other category of applicants. Black Americans are more likely to be denied credit or be approved for less credit than requested compared to any other group, regardless of income, according to Federal Reserve data. I go through this more often than I should as a business owner being denied multiple small business loans.
This lack of representation prevents Black-owned businesses from scaling and reaching their full potential. So where do we really go from here? This means increasing awareness, visibility and equity of investments in Black founders. Support us through the beginning stages of our business journey because once the people commit to change and start making these changes, closing the funding gaps between Black and non-Black founders will gain momentum. We can have more black investors, more Black-founded companies, more black fund managers—more representation that allows us to work meaningfully to level the playing field.
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