Why Black Female Founders Deserve A Closer Look From VCs And Investors

Being the most educated and entrepreneurial female group in the U.S., black tech women founders receive less than 1% of VC funding. And even if they succeed in receiving the cherished funding, its scale is usually about $36,000, comparing with $1 min. figure for white male founders.Though some individual initiatives to fight this bias occur, there is a lot to be done in this field.

Pallid Statistics

If we appeal to official statistics, we will figure out that black women are known as the most educated group in the U.S., and they constitute the highest percentage of any group enrolled in college, as per the 2011 U.S. Census Bureau. According to the U.S. Department of Labor reports, «60% of black women are active in the labor market, but are grossly underpaid.

 

Also, and that is even closer to our theme, black women are the fastest-growing group of entrepreneurs in the country. As reported by the Institute for Women’s Policy Research, there was a 265% increase in black women-owned business between 1997 and 2014, as well as growth among all women-owned firms, which grew in revenues by 72 respectively. Overall, black women are responsible for over 1.5 million businesses all over the country, which generate more than $44 billion a year in revenue.

 

Where The Problem Lies

It is investigated that women start companies at twice the rate of men, but they receive funding much worse than their male colleagues. According to a study by First Round Capital, founding teams including a woman outperform their all-male peers by 63%, but female CEOs get only 2.7% of all venture funding, women of color get nothing – only 0.2%.

 

The fact of underfunding lies deep in the confluence of thoughts concerning diversity, use of technology, and economic policy. All these reasons lead to the difficulties of receiving funding from investors and creditors and securing lending. In this case racial bias goes beyond the common sense. And even if black women are funded, they get the short end of the stick – $36,000 as average. Only 11 of the 88 black women founders had raised $1 million or more in funding. White male startup founders, on the contrast, receive about $1.3 million in funding. The difference is quite significant, isn’t it?

 

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