When Ayana Parsons, cofounder and general partner of The Fearless Fund, took the stage today at the ForbesBLK Summit in Atlanta, it was an emotional moment. She was there alongside political leader Stacey Abrams and Dr. Sesha Joi Moon, chief diversity officer for the 117th and 118th Congresses. “Anytime you are surrounded by Black women, they are going to pour into you,’’ Parsons said. “So, when I walked on this stage, these eyes were watering because they understood the heavy burden that is on all of us in this country.’’
Part of the heavy burden on Parsons these days is a preliminary injunction issued earlier this month by the U.S. Court of Appeals for the 11th Circuit blocking the Fearless Fund from awarding grants exclusively to Black women entrepreneurs–it’s very purpose. The court determined that this practice likely violates Title 42 of the U.S. Code, which prohibits private parties from discriminating on the basis of race when making or enforcing contracts.
While less than 1% of start-ups with employees receive venture capital investment to get rolling, VC dollars play a crucial role in the highest growth start-ups. Moreover, businesses who receive VC money enjoy related benefits, including alternative funding sources, valuable mentorship and industry connections, and increased representation in the business world. That can be particularly important for Black entrepreneurs who might not otherwise have access to those contacts.
At the ForbesBLK Summit, “access” and “bias” were consistently highlighted when discussing venture capital. It’s no mystery why: Startups run by Black women received just 0.34% of U.S. venture capital dollars in 2022.
The Fearless Fund’s Parsons put it this way: “As Black people there are three things we need—love, money, and power. And as Black people we have a whole lot of love, but what we don’t have is a lot of money and we don’t have the power.”
Yelitsa Jean-Charles, founder and CEO of Healthy Roots Dolls, a toy company that empowers young girls and celebrates the beauty of diversity through its dolls and storybooks, has been a rare recipient of VC investment. “I was one of the first Black women to raise $1 million in venture capital, and that is a problem. There is always a start-up program and 5-week boot camp, but no one is cutting the check,” she said.
The World Economic Forum suggests that the death of George Floyd drew attention to Black startups–at least for a brief time. In 2020, VC funding of Black businesses surged to between $850 million and $1.2 billion. But by 2022, as overall VC funding fell, the money going to Black start-ups declined even more sharply–by 45%.
One panel at the ForbesBLK Summit explored ways to turn that around. Its title: Show Me the Money: Get the Attention of Investors to Raise Capital. Panelist Michael Pronam, a partner and managing director for Scrum Sports & Entertainment, suggested that networking is the key to increasing the number of minority businesses that receive venture capital. “There is a direct correlation between underfunded and under-networked. One thing that you can actually own is your network. Even if that particular start-up doesn’t get funded they should leave the pitch meeting with connections.”
Stacey Abrams has been pioneering other ways to increase funding; she’s co-founder of the Now Account Network which provides working capital to small businesses by converting their trade receivables almost immediately into cash.
In closing, Abrams, a lawyer and author, gave the audience her take on how Black Americans can thrive economically. “We have to stand firm and hold our businesses accountable. We have to speak up. We have to tell our stories. We have to stay connected. There are organizations doing the work and investing in our future because we are winning and we cannot win if we give up.”
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