Black Women Entrepreneurs Need Funding, Not Mentorship
“Corporate America was not built for blacks and certainly not for black women. That is why we need to carve out our own space.” This is how my conversation with Marty McDonald, founder of Boss Women Media, departures. After being the only one in the room, McDonald’s decided to start a business focused on empowering women to develop the careers of their dreams. As happens all too often, she didn’t see what she could and wanted to be in a corporate world that didn’t seem interested in seeing her reach her full potential. She started her business so that she could be who she knew she was capable of being. Women, especially black women, have long struggled for equal representation in the workplace. The United States Bureau of Labor Statistics shows that although women make up over 50% of the available talent pool and occupy 52% of all managerial and professional-level positions, less than 21% of senior executives in the United States United are women, and women make up only 5% of CEOs in large companies. What’s more, only 1% of senior executives in the United States are women of color. This corporate environment pushes many women, especially black women, to become their own bosses. Covid has accelerated this trend and Black Women entrepreneurs are now among the fastest growing segments.
According to Global Entrepreneurship Monitor in the United States, 17% of black women are starting or running new businesses. This is compared to just 10% of white women and 15% of white men. Over the past 20 years, while women-owned businesses have grown 114%, women in Color-owned businesses have grown by 467%. Yet despite this early lead, only 3% of black women run mature businesses. McDonald’s shares an even more shocking data: “Of the 1,800 black-owned businesses that are created every day, only 20% exceed the poverty line. Why? Because of the lack of equal access to capital.” McDonald’s herself has seen how difficult it can be to get an SBA loan. Pre-Covid, she has been denied a small business loan on several occasions and for reasons ranging from a name deemed “too ethnic” to a lack of understanding of her business model.
Goldman Sachs research found that only 40 black women in the United States raised more than $ 1 million for their businesses. Like McDonald’s, their research highlights institutional inequality due to lack of access to finance, grants and loans.
McDonald’s argues, very effectively, that in order to build the future, we must recognize the past as uncomfortable as it can be. âThe past is that black people were left behind. Black people, as a collective, had limited opportunities. I think of my black grandmother, who did not have the opportunity to buy land or real estate. I am biracial and I have a white grandmother who had the opportunity, when she was 20, to acquire 56 acres of land. So if those were the laws in place, how do you think? you know someone is supposed to catch up? â
One way for the private sector is to scale up and provide financial, training and support opportunities. For example, McDonald’s has partnered with Amazon on several occasions and she recently became a mentor for Amazon’s Black Business Accelerator Connect program. Thousands of black small business owners and entrepreneurs have already signed up to participate in the program and access financial support, business training, mentorship, and marketing and promotion opportunities.
Amazon launched the BBA in June 2021, committing $ 150 million to the project. More recently, he also spearheaded a collaboration with Lendistere, an established minority-led community development finance institution (CDFI) that serves small urban and rural businesses in socially and economically struggling communities. The majority of the funds that Lendistry has historically disbursed has gone to traditionally low to moderate income business owners and other historically disadvantaged business owners and the communities they serve, including African American populations and Hispano-Latino.
The collaboration between Amazon and Lendistry has generated a lending solution designed specifically for Amazon sellers. Lendistry will provide term loans targeting a range of $ 10,000 to $ 100,000 with terms of up to two years and annual percentage rates typically between 8% and 9.9%. Since companies are at different stages of development and their leaders have different needs, capital can be used to grow the business in the Amazon store in a number of ways: staffing, operational costs, management of inventory, product development and manufacturing, and marketing effort.
Another way to support black women in business, whether they are running their own business or part of an organization, is to move from mentoring to sponsorship. A sponsor is an advocate in a position of power and influence. Sponsors create real opportunities for another person. They promote their downline and recommend them for new opportunities. Unfortunately, women tend to be over-mentored and under-sponsored. Only 32% of white women and 26% of black women report having access to sponsorship. Yet sponsorships can be extremely powerful in helping women advance their careers. We tend to think of sponsorship within an organization, but the practice can be very effective even for women entrepreneurs. It’s about making connections and recommending the company.
I ask McDonald’s why she invests so much time as a mentor and sponsor besides dedicating her business to empowering women. She said: ‘I think of my daughter, who is seven months old. In 2040, she will be in her twenties and in her world, she will not be in the minority. It will be in the majority. And so, I must do my part to prepare her for success. And being that majority piece by surrounding it with diverse people, diverse organizations and diverse outlets, we are collectively making this change. part to set up my kid and everyone who looks and identifies as they do for a better future. As an analyst who used to look at facts and figures to understand trends, it is clear to me that investing in black business as a whole is not a must just to rectify the misdeeds. of the past, but to thrive in a just society and upgrade the core operating system of the American economy as a whole to a new, inclusive and prosperous version of itself.
Disclosure: The Heart of Tech is a research and consultancy firm that engages or has engaged in research, analysis and consultancy services with many technology companies, including those mentioned in this column. The author does not own any stake in the companies mentioned in this column.