DigitalunDivided co-founder and blogger Kathryn Finney took to Medium to write a provocative and thought-provoking post on the state of black women and tech funding.
“The fact that only 11 startups led by black women have raised more than $1MM in outside funding is striking for two reasons: (1) In tech, raising at least $1 million is an indicator that a company is at the later stages of seed funding and is moving from proving the market to growth, and (2) the average amount raised industry-wide by startups that ultimately fail is $1.3 million,” writes Finney in her post.
Finney correctly and succinctly summarizes the basic, underlying problem in her piece: black women are not receiving tech funding dollars and on the occasion they do, they are receiving far less money than white male tech company founders.
And yet, African American women are more entrepreneurial than ever. The number of businesses owned by African American women grew 322% since 1997–making them the fastest growing group of business owners and entrepreneurs in the country.
Getting access to capital to make a business flourish is an obstacle to business growth for many minorities and, in particular, black women. Finney writes that having the backing of venture capitalists and other investors is a huge benefit to going it alone with self-funding.
“Self-funding is less desirable and advantageous than equity-based investments. The benefits of equity-based investments like angel and venture capital extend beyond financial contributions. Investors who provide money in exchange for equity are incentivized to make sure their investments succeed in a way that a credit card company or a business plan competition do not. Venture investors often share their networks with companies they are investing inâ€Š–â€Šthus increasing the founders’ networksâ€Š–â€Šwhich can lead to other investments. Also, many venture firms provide non-financial services like marketing, recruitment, and operations assistance to support their founders. These in-kind services, which save the company money and time, are invaluable to the success of their founders.”
Finney based the Medium post off of DigitalunDivided’s latest ProjectDiane report– which provides information about black women and startup funding.
DigitalunDivided is a social enterprise that develops programs that increase the active participation of urban communities, especially women, in tech.
Click here to read the post in its entirety. Finney encourages discussion on the subject in the comments section.