In the past two years, the number of Black-owned businesses — a number that has historically lagged behind other racial groups — has increased at a rate that can be called a seismic shift.
The number of new Black business owners soared by nearly 40% from February 2020 to August 2021, according to data compiled by a University of California, Santa Cruz researcher. That’s following an initial dip of the same amount from the first month of the COVID-19 pandemic, but is much higher than entrepreneurship increases seen in other groups.
Alongside the pandemic forcing new business ingenuity, looking back to June 2020, one catalyst is clear: The video showing the murder of George Floyd caused worldwide protests and led to somewhat of a racial reckoning, with even the largest corporations swearing they would do better. That led to a plethora of new programs and resources supporting Black biz owners, from grants to “Buy Black” lists.
“Many corporations have taken to the sympathy play of creating funds and initiatives for racial injustice,” she said during a virtual Introduced conference interview. “In many cases, they were saying, ‘Where’s that person of color? Where’s that Black person that we can reach to, to show that we support these initiatives and that we’re sorry for what was recorded on the streets?’ That’s just calling it like it is.”
Regardless of what caused the spike in initiatives for Black entrepreneurs, Greenwade doesn’t hesitate to say that she believes it will last. Indeed, she is actively working to make it so.
“I’m a unicorn in the sense that I am a Black woman that is seeking to transform tech and support 100 wearable tech startups by 2030,” Greenwade said. “They’re not just Black and brown. They’re also startups from founders that may be autistic, have ADHD, may be seeing or hearing impaired. … Basically, I’m saying you have a unique perspective to develop technology in the wearable tech sector.”
Diversifying entrepreneurship is a key factor to maintaining the country’s reputation for innovation, she said, noting that it not only boosts the economy, but also brings opportunities for families.
The cultural shifts
While wealthy corporations have made efforts to shift culturally, Black communities have shifted as well. Black families creating wealth has been a long-term goal and challenge, and owning a business has become a more desirable way to do it, as Technical.ly has previously reported.
“In many cases, those that have gone through the pathway of education, from high school to college — even prior to the pandemic — the path of entrepreneurship or the path to the startup world was not promoted,” Greenwade said Black families and the tech sector. “If anything, the message was, ‘Go get a good job.’”
Black business ownership, including in the post-Floyd pandemic era, tends to skew away from tech and toward industries where Black entrepreneurs have long thrived, according to Greenwade — say, haircare, body care and food. Those are the industries that are most often highlighted for Black entrepreneurs, even as Black tech entrepreneurship accelerates.
The VC conundrum
That stubborn funding gap is a barrier, too — that Black founders receive less venture capital than their white counterparts. But Greenwade pointed out that before an entrepreneur can pitch their startup to VC investors, they need to be established to a certain point, and that itself takes a lot of money.
“In many cases, it starts with families, principals and also angel investors,” she said. “So when you do not have appropriate pools of funding to help stimulate your startup from that [first stage], if you do not have a network that is supportive from that angel investor network, and if you do not have a network of supportive advocates and mentors that are going to provide and introduce you to pivotal relationships, in many cases, we will not see the startups that gain that traction that can be presented to VCs.”
To add to those challenges, experiential differences can lead to a non-Black investor not seeing the value in an innovation from a Black founder.
“There are particular niches and sectors that VCs will invest in,” she said. “So if you have a VC that has a limited experience, and may not understand where a nontraditional or underrepresented founder is coming from, in many cases, they will dismiss the innovation that is coming from that particular founder, and there’s missed opportunity.”
That last point in particular is why the new programs focusing on funding underrepresented entrepreneurs in order to increase representation should be focused not only on entrepreneurs, but angel investors and VCs as well. Those efforts can compound impact.
“I think when you have people that have been dismissed previously that are competent and finally get in a place where they can champion the cause for new innovations to come to play,” she said, “we’ll begin to see more initiatives such as the one that I’m helping to lead to make sure that we’re identifying that talent, giving them support and also providing the network necessary so that they can get to the VC round if they choose.”
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