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Black Founders Face Barriers in Accessing Capital



According to McKinsey & Co. the average black founder starts a business with approximately $35,000 while White founders start with $107,000.


Many founders will tap into their personal or family savings accounts and will reach out to friends and family for an initial investment to help them build their business. Access to capital, whether in the form of loans or venture capital, is essential for the viability of any business. Most business owners need funding beyond their personal savings to help cover start-up costs and have the working capital needed to grow and scale.


The longstanding racial wealth gap has prevented many black founders from accessing a network of friends and family who can help with starter capital. Research also points to barriers in securing funding from traditional institutions, including banks and VC firms, which further hinders black founders’ ability to grow their business. Black founders received only 1.2 percent of the record-breaking $147 billion raised by start-ups in the first half of 2021.


IFEL Aims to Create Access to Capital, Knowledge and Networks


IFEL features programs designed to increase access to capital and build stronger wealth creation among historically marginalized populations. Two examples include:


The Making of Black Angels is a movement to increase the number of black angel investors.

We believe that diversity and inclusion efforts designed to increase the number of black people involved in angel investing will lead to more black entrepreneurs receiving angel capital, the first step in getting on the path to venture capital. Visit www.makingofblackangels.org and join our Facebook and LinkedIn Groups. The Making of Black Angels is funded in part by JPMorgan Chase & Co.


Women of Color Connecting (WOCCON) leverages the power of relationship capital. Because capital constraint remains a defining problem for the majority of Women of Color entrepreneurs, we are attacking this problem from a different angle. We are engaging the vast IFEL network to use their expertise and relationships to get more women of color on the grow-scale-exit trajectory to building wealth through entrepreneurship. Visit www.woccon.org and follow us at @WOCConnecting on Facebook and Instagram. And watch for details for our 2022 WOCCON Summit!

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