Building the Ecosystem for Black Women Entrepreneurs in D.C.

Summary of Study

Bottom Line: Black women are disproportionately entrepreneurial, but receive far less access to capital. Prospects are especially poor for black women in Washington D.C., where their ventures are often stuck in the micro-level. These inequities stem from the systematic denial of access to financial and social capital (among other factors) for women and people of color. Ecosystem builders such as the Kauffman Foundation's Inclusion Open Grants help bridge access to networks and can help fill this gap.

According to a 2018 report commissioned by American Express, there are 2.4 million businesses owned by black women nationally, and black women actually have higher shares of business ownership than black men. Yet at the same time, black women founders receive less than one percent of venture capital deals, and receive lower loan amounts at higher interest rates than other founders.

Just 18 percent of all business establishments in D.C. are reported to be owned solely by women, and only 27 percent are owned by people of color. These businesses are much smaller, too, both in terms of their gross receipts and in terms of how many people they employ.

Among all businesses nationally, those owned by Black women have average sales per business of $28,000, compared to $768,000 for those owned by white men. And businesses owned by black women have an average of 8.2 employees and average sales of $557,000, compared to 13.1 employees and $2,866,000 in average sales for those owned by white men.

Banks continue to show bias against black entrepreneurs. A study using a “mystery shopper” approach found that banks are far more likely to offer help with small business loan applications to white entrepreneurs than to black entrepreneurs. Banks also subject black applicants to higher levels of scrutiny, such as by asking about their spouse’s employment status—a question not asked of the white applicants.

Ecosystem builders have launched a wave of new initiatives across the country to address the lack of access to financial capital for underrepresented founders. In D.C., Village Capital, Backstage Capital, Harlem Capital, and Precursor Ventures are just a few of the firms dedicated to investing in underrepresented founders. Building social capital in communities of color allows more people to invest in founders and encourages entrepreneurs who may be struggling to grow their businesses.

Black Girl Ventures Foundation became a 2019 Kauffman Inclusion Open Grantee and was granted $450,000 from the Ewing Marion Kauffman Foundation to expand its work in five cities. Access to networks of experienced and wealthy people stemming from such ecosystem builders is the key to unlocking the financial divide in our country.

Read the full study HERE

Feature Charticle

Washington D.C. Establishment Demographics

D.C. Policy Center

Findings:

  • Just 18 percent of all business establishments in D.C. are reported to be owned solely by women, and only 27 percent are owned by people of color.

  • These inequities stem from the systematic denial of access to financial and social capital (among other factors) for women and people of color.

  • Ecosystem builders, which help bridge access to networks, such as the Kauffman Foundation can help fill the gap.

Read the full study HERE