How Much Funding Do WoC-owned Businesses Get?
The third annual Womxn of Color Summit will take place Summer 2022 and it will be a hybrid summit that will have both an in-person and virtual component spanning over 5-7 days in total.The in-person portion will be our first-ever healing retreat for Summit attendees!
We are asking for your help to kickstart $3,000 to fund a portion of our next annual summit. Dependent on the amount of funding we receive to fulfill our stretch goal of $10,000, we anticipate this retreat to hold 20-100 people.
As we raise funds for our in-person retreat for the third Womxn of Color Summit happening in summer 2022, we can’t help but think about the hurdles that BI&PoC womxn of color founders come across when seeking venture capital.
The venture capital (VC) world is dominated by white men who mostly fund other white male entrepreneurs. There’s an inherent trust that a white male led startup can achieve their projections and overcome problems, whereas female founders are met with more doubt. Laura Huang, an associate professor of Business Administration, told Girlboss that the questions asked to male founders are centered around how big they can scale their business, while female founders are asked what problems they anticipate. The hurdles are even greater for female founders of color, as they’re met with misconceptions and less trust about the problems they want to solve. (Gaillot)
When founders of color do get funding, we get less. ProjectDiane, a study providing data on the landscape of black & latinx women entrepreneurs, found that while black and latinx women received 4. 8B from 2020 through the first quarter (Q1) of 2021, we represent less than 1% of venture capital funding. In fact, in her newsletter SheInvests, Jackie Zehner, angel investor, states that recent data shows that while female founders received 2.8% of VC funding in 2020, only 0.2% went to black and latinx entrepreneurs. Male founders, however, received 97.2%. She adds, “It has been argued that women are less likely to start the types of businesses that attract VC capital…But even if that is partially true, it is not 97.2%.” Where is this lack of trust in BI&POC women founders coming from? From what point of view are investors making the decision to pass up on our ideas?
Unfortunately, when engaging in this conversation, Native American founders and VCs are often left out. So far, no data exists on VC funded Indigenous American owned businesses, according to Tribal Business News. Valerie Red-Horse Mohl, Executive Director of Social Venture Circle and professor at Stanford University, told the outlet that her students have amazing ideas, but there’s a subconscious belief they won’t get funding. If BI&POC founders don’t get the needed support to drive our businesses forward, we must let them go. This lowers the financial wealth of our communities, which takes a toll on collective wellness.
How the Venture Capitalist Industry Can Support WoC-owned Businesses
Having a diverse team of VC founders helps provide more womxn of color with funding. A recent study by Harvard Business Review looked at the effects of diversity in the venture capital industry: Since 1990, the industry has only had 8% of female investors, 2% being of Hispanic descent, and even fewer were black. Also, VCs stick to the same types of deals in industries they’re familiar with, and investors are much more likely to partner with those of the same gender or race. By examining tens of thousands of investment decisions, the study discovered diversity in venture capitalist teams grows their portfolio’s financial gain.
While the pandemic created economic uncertainty, forcing some to leave entrepreneurship for a steadier paycheck, it’s also been the cause of increase in funding due to a global social justice movement, according to ProjectDiane. The report adds, “… despite mass pandemic related uncertainty in the first three quarters of 2020 [5], the U.S. VC industry posted record investment into high-growth startups by the end of the year, upwards of $166 billion [6,7]. This was characterized by an uptick in deal counts and sizes in Q4 2020, and this momentum has continued into Q1 2021. These trends were evident among Black and Latinx women-founded startups that raised record levels of funding at the end of 2020 and in early 2021.”
Zehner points out the tendency to work with others of the same race and gender can be used to increase access to capital for BI&POC founders: “If we want to improve the stats above and close the gap by bringing the wellbeing of all Black Americans up, one powerful strategy is to invest in Black Fund Managers, who in turn invest in Black founders, who in turn hire Black employees, which improves the economic well-being of Black families, Black communities, and so on.”
Not all funders are venture capitalists. Some are people in the community who believe in what we do, like some of the sponsors for our in-person healing retreat. Your support allows us to continue our work!
Written By: Joséphine Mwanvua
The third annual Womxn of Color Summit will take place Summer 2022 and it will be a hybrid summit that will have both an in-person and virtual component spanning over 5-7 days in total.The in-person portion will be our first-ever healing retreat for Summit attendees!
We need your help to spread awareness for our campaign, and there are two quick ways that you can get involved right now:
1. Share our campaign page on social media and to mission-aligned investors and organizations that you know we should be in connection with.
2. If you are able to, we gratefully accept monetary contributions of any dollar amount. Rewards are set for monetary contributions valued at $20 and higher.
We know we cannot do this work alone and we thank each and every one of you for your support, energy, and love.