It seems like every other day there’s a new tech startup being launched by an ingenious entrepreneur that received the capital to make his or her dreams come true.
That business person, unfortunately, is rarely a Black woman according to a study by Project Diane.
Despite Black women being the fastest-growing group of entrepreneurs in the U.S. —owning 1.5 million businesses and generating $44 billion a year— the initial support to launch is not there.
The research lead by Kathryn Finney with Dr. Marlo Rencher was published in “The Real Unicorns of Tech: Black Women Founders” and examined 60,000 startups 88 of which were Black women led. Finney discovered that the average tech startup founded by a black woman raised $36,000 in venture funding versus the average failed startup led by a white man that raises $1.3 million before going out of business.
“They weren’t getting the seed funding they needed,” Finney told Forbes. “We don’t have lead investors. We don’t have people willing to write that first big check.”
Unfortunately the proof is in the pudding, because despite the advanced degrees and connections Black women entrepreneurs have, they only received 0.2 percent of all venture funding in the past five years.
“People don’t see black women as innovators,” Finney said. “It’s mind-boggling to me. We have to change the dynamic of being cultural creators but being left out of economic gains.”
As noted by Forbes, Finney doesn’t expect Silicon Valley to become inclusive overnight, or at all. Rather, she’s looking to city and state governments, foundations and grant-making organizations, and individuals with a vested interested in the economic success of minority entrepreneurs to step up.
Project Diane is advising foundations with economic development as their cornerstone to set aside a percentage of their investment dollars to fund diverse managers — or to divest in funds that have no racial or gender diversity in their portfolios.
“It’s so much easier to talk to someone about market opportunities if they actually value the market,” said Finney. “In Silicon Valley, we find ourselves validating the market, validating that black people matter.”