It’s difficult to ignore the rapid pace at which the world’s social, political, economic, and environmental landscapes are shifting.
Simultaneously, creative innovators are working to meet current needs and ways of life. A vast array of thinkers, makers, and doers in the fields of technology, medicine, education, mental health, social change, fair-trade, and enhanced quality of life, are looking to use their unique skill sets to transform creative ideas into reality.
One critical question, though, is how to support these changemakers so that the most people possible—with as many diverse backgrounds as possible—are enabled to contribute their entrepreneurial gifts to the world.
On the other hand, if we do not take steps to support the diversification of the entrepreneurship arena, the critical question instead becomes: what essential opportunities and innovations are we missing out on?
The current statistics on US venture capital funding seem to indicate that it’s this second question that we should be asking. With only one percent of all funding allotted to Black American business founders, five percent to women founders, and a mere 0.2 percent to Black women founders, it’s easy to see the gender and racial disparities that plague the startup world.
However, it’s the invisible aspect of this inequity that calls for greater thought—the added value that individuals not supported with sufficient funding might have brought if they had equitable access to startup capital. As Greg Johnson of Fortune suggests, “Corporate America is missing out on the opportunity to drive innovation and growth by creating business value and greater reach into international markets, which advancing racial equity would do.”
Studies from McKinsey reveal that when starting a business, White entrepreneurs have access to an average of over $100,000, which includes roughly $20,000 in venture capital from external sources. In stark contrast, Black entrepreneurs typically begin with around $35,000 in capital, and this includes only $500 in outside equity.
There are a few key players who are out there supporting Black-owned and women-owned startups: Harlem Capital in NY, Backstage Capital in LA, Collab Capital in Atlanta, and The Harbor Bank of Maryland (a Black-owned bank that supports Black business owners), are among them. As these forward-thinking organizations work hard to change the face of American entrepreneurship, though, more privileged business owners continue to take much easier strides.
That’s not to say those business owners don’t also deserve financial backing, or that their success isn’t positively impacting their communities and the world. But it cannot be denied that there is a vast racial and gender divide when it comes to financial support for startups in the United States—one that’s leaving a lot of equally deserving and impactful business owners behind.
Hopefully, more organizations will begin to back business owners from otherwise marginalized groups, so that we don’t continue to overlook life-enhancing and even world-changing contributions.
If we want to see true entrepreneurship-driven transformation in the US, and to enhance the level of thought and creativity at our collective fingertips, diverse voices and perspectives need an equitable seat at the table. It’s not enough to continue to support solely the same groups of people; in order to change the face of Corporate America, we have to let the faces of Corporate America change.
