Despite increasing diversity in many parts of the country, Black and Latinx entrepreneurs are still being left behind in business. To put things into perspective, a survey conducted by the US Census reveals that a fifth of Massachusetts’ population is Black and Latinx, and yet only 3% of businesses with employees in the state are owned by these minorities. There is a range of causes for these low entrepreneurial success rates, such as the racial wealth gap, struggles to get bank loans approved, and the lack of help from state officials who have the power to create more access and opportunities for minority entrepreneurs. Business is difficult enough to manage, but getting funding as a Latinx or Black founder is even more challenging. Fortunately, there are some ways to improve your chances.
Understand Your Disadvantages and Promote Your Advantages
Getting an initial opportunity with new venture capitalist (VC) partners is difficult, and it is often also the case that some starting entrepreneurs underestimate how difficult it is to raise capital. It’s hard to have realistic expectations when you read blog posts and media stories simplifying the process of obtaining funding and understating how difficult it really is. However, it’s essential to learn early on that securing funding is a difficult process, even if you’re already meeting with a VC. In fact, many founders often pitch over a hundred investors before completing their raise. And, unfortunately, there’s the added disadvantage of inherent bias against Black and Latinx individuals.
However, many Black and Latinx individuals have many advantages that they can focus on in conversations. For example, you might have uniquely valuable insight into your customer base. You might also demonstrate your grit and endurance given that you probably have had to jump through additional hoops to get to where you are. Finally, it’s been demonstrated that BIPOC founders tend to build more diverse teams and that diverse teams outperform homogenous ones.
Highlight and Improve Your Credentials
Educational credentials aren’t necessarily required by investors when discussing funding. However, it still comes in handy to show that your background is perfectly suited for your venture. Look at it from the investor’s perspective: when you see someone with a master’s degree in business administration, it shows that the person leading the company is well-versed in strategic thinking, team management skills, and the know-how to work with colleagues, employees, and stakeholders. Solid credentials can also point to work experience or particular areas of study, that can give you a unique and deep insight into the needs and behaviors of your target customers. Overall, your qualifications and experience can help earn your investor’s trust and show that you are on par with the competition.
Connect with Like-Minded Investors
It is important to connect with like-minded investors who share the same vision that you have for your business. Having this in common is more likely to make the partnership fruitful. Also, accelerators allow ventures to quickly build networks and define their services and products while providing an opportunity for representation. As a founder, this could be the turning point of your business as you get connected with investors who build your credibility and open up new networks. There are platforms like F6S that match accelerators with entrepreneurs, and they offer startup workshops, business mentorships, and a great network of stakeholders, partners, and customers. To impress accelerators and potential investors seeking diverse businesses, it’s best to play to your strengths and demonstrate why you’re the best team to address this unique opportunity.
About the Author
Olivia Miller is a proud entrepreneur with a small but successful online baking business. When she isn’t mixing dough or taking food photographs, you’ll find her doing science experiments with her son or reading a good book.