In the heart of Baltimore, a story unfolds that encapsulates the multifaceted struggle for African American entrepreneurs to access capital. Our journey serves as a poignant reminder of the barriers posed by implicit bias and the transformative potential of diversity, equity and inclusion. It also highlights the critical role that private equity can play in supporting Black entrepreneurs and driving economic progress in Baltimore.
Many of us have a vision that can inspire citizens from Edmondson Village to Patterson Park, but soon discover that our path to success is far from straightforward.
An entrepreneur’s ability to access to capital can either propel dreams to fruition or shatter them into fragments. For many, this truth is all too real as we embark on a quest to bring ideas to life. Despite a remarkable concept, a strong business plan, and undeniable technical expertise, the process is often riddled with implicit bias.
According to many Black entrepreneurs I have spoken with, the first stop is a bank, where they inquire about a loan to kick-start their entrepreneurial journey. With unwavering confidence, they present a meticulously prepared business proposal, replete with the potential for their company or tech app and their own expertise. However, what they often encounter is a perplexing and heart-wrenching ordeal of repeated rejection.
Oftentimes it’s a harsh awakening, and what many learn is a shared experience among African American entrepreneurs in Baltimore, who are too often overlooked and underestimated, despite their undeniable potential.
Overall, Black entrepreneurs typically receive less than 2% of all venture capital dollars each year, while companies led by Black women receive less than 1%, according to data from Crunchbase.
Sometimes we explore alternative avenues to fund our dreams by attending tech events and connecting with organizations that support minority-owned businesses. In these circles, we seek fellow entrepreneurs who have encountered the wall of implicit bias within traditional financial institutions.
Through these connections, some managed to secure grants and angel investments from organizations committed to promoting diversity, equity and inclusion in entrepreneurship. With this financial support, dreams begin to take shape, and some of us even become a beacon of hope to other struggling entrepreneurs.
Baltimore is a melting pot of untapped potential, and access to capital is the linchpin of economic empowerment and entrepreneurship. Without equitable access to funding, African American businesses often find themselves struggling to grow, compete and contribute to our communities. The resulting economic disparities perpetuate a cycle of inequity, impeding the ability to create generational wealth and financial stability.
To many firms, investing in founders from diverse backgrounds is considered a riskier bet because the entrepreneurs differ from the norm they’ve become accustomed to, said Ladi Greenstreet, the CEO of Diversity VC, which works to tackle systemic bias within venture capital.
To address these disparities, systemic change is necessary. Financial institutions must actively work to address implicit bias in their lending practices and prioritize diversity, equity and inclusion. Government policies and programs should incentivize investment in minority-owned businesses and promote economic development in underserved communities.
Private equity also can play a pivotal role in supporting African American entrepreneurs by providing not just capital, but also mentorship, guidance and a platform for our voices to be heard. There is immense potential within underrepresented communities. Private equity firms have a unique opportunity to invest in Black entrepreneurs, providing us with the financial resources and expertise needed to succeed and break down barriers that have long hindered access to capital for African American businesses.
Diversity, equity and inclusion are not just buzzwords; they are the driving forces behind economic growth and social progress. When diverse voices are heard and supported, communities flourish, and entire cities benefit.
For many of us who go on this entrepreneurial journey, we find the power of determination and community support in the face of implicit bias. Our stories are a beacon of hope, reminding us of the profound impact that inclusivity can have on our city’s future. By leveling the playing field and fostering an environment that values diversity, equity and inclusion, Baltimore can unlock the full potential of its diverse entrepreneurial talent, driving a brighter future for all its communities.
I implore private equity and local financial institutions alike to take a deeper dive into this underserved and underinvested community of gifted dreamers. I’m confident the next Reginald F. Lewis, the first African American founder of a billion-dollar company, is waiting in the wings to be discovered — or better yet, funded.
Kevin Shird (kevin.shird@yahoo.com) is an author and activist.