In 2016, the Center for Global Policy Solutions reported that due to discriminatory financing practices and a bias towards companies primarily operated by white males, America is losing out on over 1.1 million minority-owned businesses. As a result, the economy is foregoing over nine million potential jobs and $300 billion in collective national income. Four years later, the problem still persists—and then some.
People of color have faced economic inequality for hundreds of years in this country, but the recent Black Lives Matter protests have made generation-spanning problems into a hot button issue of our present time. As hundreds of thousands of Americans across the country peacefully protest against systemic racism and police violence—all during the coronavirus pandemic that disproportionately kills Black people—they are turning a spotlight on institutional bias throughout all corners of our society. One area that requires systemic change? Entrepreneurship and the venture capital system that fuels it.
The United States remains inequitably behind when it comes to connecting and putting dollars into companies led by Black entrepreneurs. Major VCs are risk-averse and look for existing patterns of success prior to making an investment. But before they even reach the stage of pitching a firm, Black and minority would-be entrepreneurs have a lack of access to capital that would allow them to get their ventures off the ground in the first place.