By: Lauren Small
It’s not easy starting a business as a black woman in America. Black women are the most industrious people in the country, but face the most financial barriers. Time, Refinery 29, Inc., Fortune, Essence, Wired, and CNBC all reported the spike in growth of black women in entrepreneurship. Expanding more than 300 percent since the 1990s, black women represent the fastest-growing demographic of entrepreneurs in the United States. However, business loans are increasing at a much slower rate. Out of the massive number of new businesses launched daily, black women are approved for only four percent of loan applications by bankers, venture capitalists, and other lenders.
The minimal financial support raises the question: Why aren’t black women getting the necessary funding? The answer is not lack of credentials on the applicant’s part, but rather, the lack of diversity and connection.
“African-Americans make up three percent and Latinos four percent of the venture capital workforce,” says USA Today. “None of the 217 firms with more than 2,500 employees had an African-American investment partner.”
Some lenders and venture capitalists have indicated that they don’t identify with black women. Named by Inc. Magazine as one of the most influential women in tech, Kathryn Finney was one woman who applied for funding in the early stages of her business, Digital Undivided. Finney says the lender responded by saying, “You know, I don’t do the black woman thing.”
This demeaning mentality hinders the development of prospective businesses. But this does not and will not deter black women. Instead, it often inspires our determination to succeed. Zaniesha Davis, make-up artist, finance mogul, and founder of Rock Your Crown of Memphis, Tennessee; Kris Christian, owner and founder of Chicago Illinois’ Fame Integrated Marketing Communications; and Dr. Jessica Williams, writer and professor at St. Agnes College in Atlanta, Georgia weigh in on the financial discretions against African-American women. Interviews with these three successful, business owners highlight the shift of the entrepreneurial, black woman.
Christian, Davis, and Williams all share the same characteristic, perseverance. The quality these ladies possess is not unusual. African-American women were coerced into learning this trait centuries ago. Black women were beaten, sexually abused, and overlooked as intelligent human beings. For 200 plus years, enslaved women were deemed property only capable of serving. This social construct caused black women to fight in the face of oppression while slave owners generated wealth. Today, the struggle looks different, but women of color are still fighting for equal opportunities.
Their unique “herstories” of creativity, drive, and passion continue because failure is not an option and because freedom is sometimes a luxury. Working for oneself generates freedom. It’s the freedom to make one’s own decisions, freedom to forge one’s own path, and the freedom to follow her own rules.
“Entrepreneurship is so rewarding because I wake up every morning motivated about fulfilling my purpose, instead of working on someone’s else’s dream,” says Davis. “Working for myself offers me freedom that no one can fire me, lay me off, or retire me from. My life doesn’t revolve around my job. My job revolves around me.”
Entrepreneurship has its perks, but it also has obstacles. Rejection is something all entrepreneurs experience. Learning to overcome those rejections is an innate feature of the entrepreneurial sprit. Naturally, black women moguls are learning to find ways around pitfalls instead of waiting for handouts.
“It’s so crazy the amount of rejection I’ve received,” says Christian. “I’ve gotten everything I wanted so I wasn’t used to being told ‘no.’ As an entrepreneur, you have to constantly validate yourself because you are not a big company. I’m constantly proving myself to companies that I’m worth the money. ‘You have to know people, and it doesn’t matter what your portfolio says. You’re not big enough or you don’t have enough employees.’ That can get in your mental and you start doubting yourself. I shouldn’t have to remind you who I am, and especially since I’m not white or not a man. As a black woman, you have to be strong, which is why I think we have so many entrepreneurs−because we have to persevere.”
Persistence definitely speaks to the progress of these savvy tycoons, but it doesn’t afford the same opportunities available to all proprietors.
“When denied funding, it was due to lack of personal relationship and credibility with that potential partner, or it wasn’t in their marketing budget,” says Davis.
Black women have been forced to create their own funding for their business endeavors, including finding sponsors, raising money, and borrowing from loved ones.
“My internship and my mom’s income was my first investment,” says Davis. “I used the money that I made working to build my makeup kit. When holidays rolled around, my parents became my investors through gift purchases of large-ticket items, such as make-up lights, chairs, and travel cases. Later in my makeup artistry, I discovered my passion for empowering and uplifting women, and I started hosting a hands-on beauty and empowerment workshop called Rock Your Crown. I needed and acquired sponsorships to produce the event.”
To avoid asking for money to keep her company buoyant, Christian self-published a magazine to promote her marketing firm.
“Bootstrapping is the easiest, but hardest way to get the money you want,” Christian says. “I created different streams of revenue to support the other avenues− like Made Magazine doesn’t make any money, but it generates promotion for Fame.”
The added streams of income contribute in a larger manner to the success of black women in business. It generates more black-owned businesses and lessens the need for backing from banks and lenders. Conversely, as women search for additional income generators, other demographic groups are not suffering as many extremes. Beau Schmitt, owner and founder of The Brew Project, a restaurant and bar in San Diego, California that features local breweries says he and his business partner simply ask for assistance.
“We stopped asking people and started offering. Not asking directly but asking people if they know someone and created the fear of missing out. Everyone wants to own a business. ‘If you’re interested, let us know, then no big deal.’ People that were on the fence actually ended up investing.”
Schmitt’s story isn’t short on hard work and determination, but he was offered more breaks to share his portfolio with investors. Schmitt’s story is void of asking family for backing, but chalked full of partners, potential shares, and investors.
Strides are being made to acknowledge black women as prominent business owners. For example, some venture capital firms are making efforts to be more inclusive by adding partners to head investments in diverse portfolios. This approach is helpful and industry standards are changing, but it’s a little too late. We are forced to find alternative solutions to gain recognition. Black women now expect to enter startups on their own.
“You have to change your mindset as to where you’re going to go and being around people that are going to help you,” Williams says. “You have to learn to be around wealthy white people. That means learning how to get people to like you even if you have darker skin, kinkier hair, and are 50 pounds larger and expected to have an attitude.”
Black women are crossing their T’s and dotting their I’s for less than a seat at the table, but just a peek into the boardroom. These industry leaders are going above and beyond other demographics of entrepreneurs.
Davis says, “We must be prepared. We have to be of value to the company of which we request funds. Our packages/plan must be aligned with the vision of the companies with whom we seek to partner. In addition, if a business plan is needed then we must also have our ducks in a row by being three steps ahead of the investor and knowing the questions that they will ask, as well as the questions that they don’t even know they want to ask.”
The difference between the past and the present is black women are no longer waiting for validation. They are no longer waiting for their businesses to be acknowledged by conventional forms of funding. Instead of being deterred by rejected loan applications, they create new methods of financing for their businesses to thrive. Women’s rights marches, startup conventions, and empowerment workshops such as Davis’ Rock Your Crown offer opportunities for black women to support black women. Women are making their products and target markets inclusive, “We are a multi-cultural agency so we aren’t looking for white investors. I haven’t asked the ‘man’ for money and I don’t think I’m going to,” says Christian.
Christian is not alone. African-American women are fully aware financial lenders may not relate to them or their business profiles. And though it’s not ok that lenders are not taking the time to make sound investments, black women are cognizant of their own worth. For the second time in history, the black woman’s perseverance breeds profits.