Three years ago I wrote a blog post on becoming consciously unbiased in which I stated that many of the problems that women of color entrepreneurs face are rooted in unconscious bias. I guess I was still hopeful that at our capitalist core, green was what mattered most and that changing the game for women of color was mostly a matter of getting more investors and other influencers to understand the economics of investing in black and Latinx entrepreneurs, especially women. We set out on a path to change that by making sure that the entrepreneurs selected for our Women of Color Connecting initiative pilot launched in February 2019 were seen and that we were introducing investors to them. We developed a strong community of champions and allies who rolled up their sleeves to support this effort. Our Summit in February 2020 grew to include increased participation of white women angel investors and we even had a panel called “Unpacking Privilege: A Conversation with 4 White Guys,” which was an important conversation that got everyone thinking, especially the panelists. We were all set to build on that and then COVID struck.
With everyone home in 2020, people had time to focus on current events. Through that focus, people (who are not black) finally paid attention to the fact that an all too frequent cause of death for black people is, well, engaging in normal daily activities while being black — the legacy of our history. I call it the “awakening.” This awakening was long overdue and just what we needed. In fact, I thought it was great that people were finally acknowledging that problems exist and that black people are not always treated fairly (understatement). I was excited to think that armed with this knowledge we would finally be able to address the barriers that keep women of color entrepreneurs from full participation in the capitalist economy. We were getting increasingly more interest in Women of Color Connecting and I was more hopeful than ever.
It was when I started seeing all the big announcements by major companies about the small-dollar grants they would be doling out to black-owned businesses that my hopefulness turned to anger and then disappointment. When I think about all the money that has gone and continues to go out the door to black businesses in the form of grants, I have a visceral reaction. These grants are a few sprinkles of water in a desert. If companies are willing to give this money as grants, why not give the money to black-led fund managers to invest in black-owned businesses? Investment, Not Small-Dollar Grants for Black-Owned Businesses Using the capital to spark investment would build a new generation of black fund managers while putting investment dollars to work in black businesses. This approach would put us on the path to inclusion. If companies were willing to give money away as grants, why not use it to enable, empower, and change the system? Both black fund managers and black entrepreneurs would have the opportunity to show what they can do with meaningful capital, an opportunity rarely made available for either group. What the grant-focused approach suggests is that black-owned businesses are not worthy of investment and are not capable of producing an economic return. Capital is attracted to its highest and best use, where it can produce a return for the person willing to risk it. While these grants sprinkled a few water droplets on the desert, the desert is still, well, a desert. Yes, black businesses suffered disproportionately due to the pandemic-related closures, but why is this so? Because they were under-capitalized from the start. If they had been able to access capital to start, they would have had the same opportunity as anyone else to survive. The path toward inclusion is to include. Black entrepreneurs don’t need segregated capital from black-only funds. They need to be able to drink from the same fountain as everyone else. Black fund managers need to be part of the overall fund management pool, lest we continue to propagate an environment of separate but equal in the investor community. If there is anything that we should all be willing to accept by now is that separate is anything but equal.
During our Women of Color Connecting Summit (WOCCON 2021), we committed to extinguishing the use of terms like underrepresented, minority, and disadvantaged. In the name of supporting entrepreneurs bearing these labels, the default solution has mostly been to help them get more skills. The assumption is that they are underrepresented because they have been disadvantaged due to their minority status and therefore have not had the opportunity to develop the skills necessary to compete effectively for investment. Newsflash...even the black women who have been educated at Harvard and Stanford who have multiple degrees who have scalable businesses based in New York or the Bay area are not getting funded at the same levels as their white male counterparts with similar profiles. Black women have been excluded.
Intentional or not, the numbers have reflected this exclusion for a long time. For the investor ecosystem to continue to chug along without the representation of black women means that the bulk of investors are just fine with the status quo… given the awakening, we can no longer characterize this behavior as unintentional nor the result of unconscious bias. Black women have been and continue to be excluded from the investor ecosystem and we need to acknowledge this as the causation underlying their access to capital problem. White Men Show Promise — Black Women Must Provide Proof Paraphrasing one of our entrepreneurs, black women have been making whole meals out of bread and butter for centuries, and have grown businesses in the same way. With just a little fuel, we would see many of these same businesses soar. Just as many companies led by white men fail, so too will companies led by black women fail. The reason that they fail, however, should not be because they continue to be excluded from the investor ecosystem.
Another one of our entrepreneurs says that white men are funded on promise versus the requirement for black women to demonstrate proof. This is a dynamic that might seem unconscious, but every investor who does not have a black woman-led company in their portfolio should be intentional in finding one. What’s the worst that can happen? If the risk is that it might fail, it would simply be among the pool of failed companies in your portfolio. After all, the VC model assumes that most of e companies will flame out. On the other hand, what if she ends up being your unicorn? If your first reaction is to doubt that this is likely or even possible, it is an indication that you are part of the problem. Now what are you going to do to fix it?
Jill Johnson Co-Founder and CEO Institute for Entrepreneurial Leadership
This article was originally published on the Techstars' website, The Line.