Chanel Cathey maintains there’s power in community, in sharing insights and working together to uplift today’s entrepreneurs.
August in Martha’s Vineyard is a reunion for Black families and never fails to convene some of the most influential leaders in entertainment, business, venture capital, politics, and more.
I have been several times in recent years, but there was a deep feeling of concern lingering on the island this summer. An urgency to grapple with the recent U.S. Supreme Court decision to strike down affirmative action in college admissions and the lawsuit against the Fearless Fund, a venture fund founded by women of color for female founders of color.
As many arrived to celebrate the annual African American Film Festival, this created a unique opportunity to unpack the broader impact of this news and reflect on what these legal decisions could mean for venture, corporate diversity, equity and inclusion priorities, and essentially the future of business.
This resonates with me given my decision five years ago to launch a strategic communications consultancy and PR agency to support underrepresented founders. The funding gap is a reality for businesses with diverse founders, at a time when Black entrepreneurs, especially Black women, are emerging as one of the fastest-growing demographics starting businesses in the United States.
I couldn’t resist sharing some of the key takeaways from the Funding Cultural Currency panel hosted by CultureBanx, a panel of inspiring Black women across academia, corporate, tech, and venture. They covered the growth of entrepreneurship especially in the Black community but also the evolution of the challenges that continue to shake up the ecosystem.
A surge in Black women’s entrepreneurship meets roadblocks
Black women are not just participating in the entrepreneurial ecosystem; they are leading it. With nearly 2.7 million businesses nationwide, Black women constitute the fastest-growing demographic of entrepreneurs in the United States.
Over the past few years, the number of businesses owned by Black women witnessed a significant 50% growth. This entrepreneurial surge is not merely a consequence of ambition but often a necessity born out of a lack of opportunities, flexibility, and advancement in the traditional workforce.
“Black women are the fastest-growing entrepreneurial group in the country, but the piece about that that’s interesting is that is just how many are starting businesses. That doesn’t mean how many are getting funding. Not all money is good money. There are so many predatory practices when it comes to the black community and for women in general,” said Erin Horne-McKinney, the inaugural executive director of the Howard University PNC Bank National Center for Entrepreneurship.
Despite their growing presence, Black women entrepreneurs face disproportionate financial headwinds, specifically a lack of access to capital. Given this hurdle, Black business owners are more likely than other demographic groups to self-fund their businesses as those who apply for funding face higher rejection rates than their white counterparts. Furthermore, only a 2% of venture capital funding goes to U.S. female-only founder teams. The intersectionality of being Black and female makes the task of securing funding even more daunting.
In addition to the lack of access to capital, policy and legal considerations are also emerging as key challenges. In recent years, the entrepreneurial ecosystem has been trying to bridge the wealth and funding chasms for women and people of color through targeted funding, grants, resources, accelerators, and more. These systems which were implemented to help correct disparities, are now the focus of legal and political attacks.
Apart from the capital access issue, policy and legal considerations are also emerging as significant hurdles. In recent years, the entrepreneurial ecosystem aimed to address wealth and funding disparities through targeted funding, grants, resources, and accelerator programs.
Ironically, these efforts to rectify disparities have become the target of legal and political challenges. As Erin Horne-McKinney pointed out:
“In a climate where Black women are continually undervalued and under-resourced, we’ve accomplished so much with so little. Imagine the possibilities if we were genuinely invested in it. Yet, just as we’re gaining some attention, lawsuits like the one against the Fearless Fund and others emerge. The PNC National Center for Entrepreneurship is rallying support, whether legal or otherwise, for these funds, for ourselves, and for our partners, facing potential attacks related to race and, let’s be honest, gender. While other funds support Black founders in general, this was specifically for Black women. The struggle is far from over, and we must adapt and elevate our efforts.”
Defining our cultural currency
CultureBanx CEO Kori Hale introduced an intriguing concept called Funding Cultural Currency that could pave the way for the future. It revolves around how diverse communities harness their cultural wealth and ingenuity to establish, grow, and expand businesses.
Jacqueline Jones, Head of Strategic Partnerships (Diversity, Inclusion, and Belonging) at LinkedIn, underscored the relentless innovation within diverse communities.
“We are people who innovate constantly. Through the adversity that we face, through the celebration in our communities, we create tremendous value across music, business, sports, health, and all sectors, and it’s really time for us to lean into that and appreciate it and start valuing it,” said Jones.
Jones emphasized that it’s time to recognize, appreciate, and place a value on this innovation. She cites diversity studies from McKinsey and Deloitte that reveal a 35% increase in profits when diverse perspectives are integrated into boards and decision-making processes.
Jones asserted that this value creation extends beyond entrepreneurship, extending to the corporate world, too. To fully harness this potential, she encourages active participation in legal and intellectual property frameworks, thereby bringing cultural competency, innovation, and monetization to life.
Preparing for the disruptive force of generative AI
AI, particularly generative AI, has been transforming numerous industries and occupations. A recent McKinsey study found that generative AI could add the equivalent of $2.6 trillion to $4.4 trillion annually to the economy.
The potential impact of generative AI on jobs is a double-edged sword. While it promises increased efficiency and the creation of new job opportunities, it also poses a significant threat to existing roles. Research indicates that eight out of 10 women in the U.S. workforce are in occupations highly exposed to generative AI automation. It’s also important to take a closer look at the role of representation in business amid the seismic shift caused by artificial intelligence.
“All AI is doing is taking pieces of who and how our communities have been and then using it to share back how they believe we are. Now that’s a big statement when you think about how we as a community have been valued, how we’ve been thought about, how we’ve been portrayed, how we’ve been written about, how we have been valued and devalued throughout society from the moment many of us stepped foot on this continent,” explained Michele Jawando, senior vice president of Programs at Omidyar Network. She continued:
“There’s a sense of community, that I’m working overtime to make sure that our stories who we are, our history, our work, and our value are a part of this conversation. And if we don’t do that then we will be missed, and left out of the data, which will reinforce the biases that we currently have, the discrimination that many of us have come to experience as part of our everyday life. Unless we figure that out it will continue to generate for years to come.”
Activating community and economic equity
As we look forward and try to find ways to push for economic equity, it starts with the community, working together, and identifying the resources that can contribute to our success and ownership.
Jones pointed to LinkedIn’s efforts to scale knowledge and learning and provide more visibility for entrepreneurs and new voices. Citing LinkedIn’s research from last year on Black entrepreneurs, Jones shared that the role of a network is still unmatched. “We found that one in four points to lack of networks around sponsorship and mentorship, just having access to that advice. [We] found that 60% truly believe that having access to that advice, and sponsorship through their networks directly correlate to their success, financially, raising capital all of that.” Jones encouraged the audience to “cultivate the skill of broadening your network” as it can lead to a major breakthrough.
Jawando shared how we should think about ways to serve as access points for others. But she also relayed the importance of understanding the significant role that race and systemic structures play in society and how they impact access points. “In the market-based system that we have, how do we create more opportunities for the entrepreneurs in this room to have access to VC capital, to have access to networks, to be a part of funds and how do we continue to generate that information out to the largest group of people,” she said.
Jawando continued underscoring how “we have networks, we have opportunities, we have people we can introduce, we have seed capital” and from there can fund investments and exploration.
Jones shared that we have to consider the full spread of funding sources and that venture capital isn’t the only way. Pointing to entrepreneur and LinkedIn’s top sales influencer, Liz Simpson, as an example of a founder tapping into corporate funding and sharing her wisdom through her top accelerator helping women access capital too.
“It’s a community that supports each other to tap corporate supplier diversity funding. How to support each other to tap corporations so that’s another way of funding,” Jones explaied. “Getting yourself to profitability through strong partnerships with corporations. Also, the government funding that’s there and partnering with the government as well. It’s not all about venture capital. It’s great, but there are other ways to explore as well,” she shared.
To create a more equitable environment for Black entrepreneurs, it’s essential to acknowledge and confront the biases that exist. This acknowledgment can help pave the way for more inclusive solutions and a more equitable entrepreneurial ecosystem. As the speakers noted, there’s power in community, in sharing insights, and working together to uplift today’s entrepreneurs.
Chanel Cathey is the founder and CEO of CJC Insights, a strategic communications and public relations agency headquartered in New York City. Chanel is also on the advisory board for the Wall Street Journal’s Women in the Workplace Series.