The financing gap between Black-owned and white-owned businesses in the United States has long been enormous. Now an article in Vogue Business shows that the pandemic is making the divide worse.
Although some Black-owned businesses saw a bump in sales following the BLM protests nationwide, startup founders of color continue encountering systemic issues around access to investment.
“Covid-19 has refocused public attention to the challenges that have long afflicted Black entrepreneurs in the US and especially their struggle in accessing capital,” news editor Annachiara Biondi wrote. “Aside from bank loans, Black-owned businesses are also less likely to receive venture capital and investment from angel investors, with Black entrepreneurs receiving less than 1% of VC capital.”
Biondi spoke with a number of startup founders who have come up against these hurdles, including Mented Cosmetics co-founder KJ Miller. “[Funding] is difficult for everyone, but it’s doubly difficult when there are so few people who look like you sitting across that table in the venture capital world,” she said.
For this Plug In South LA Beat, our regular curation of must-read innovation and tech news, we’re taking a closer look at the imbalance — and how Covid-19 could actually become a catalyst for positive changes:
Lacking Financial Support, Black-Owned Businesses Are Suffering