If a lightbulb went off in your head and inspired you to start a business, good for you. Now, all you need to turn that brilliant idea into a reality is a fat wad of cash.
Sound, um, challenging? Well, I hope you're not going to let a less-than-ideal bank account stop you from entering the magical world of entrepreneurship.
Of course, if you're also a woman or a person of color, money may not be the only thing stopping you. Black Americans in particular have been historically underrepresented in this space, accounting for 12 percent of the entire U.S. labor force but only 9.4 percent of business owners, according to the Chamber of Commerce.
Research suggests that many things limit Black people from starting and growing businesses, including educational barriers, student loan debt, financial status, and access to investors, according to Brookings Institution.
Systemic issues aside, there are still a ton of folks out there looking for clever business owners, like yourself, to invest in—you just gotta know where to look. Just ask one of the 300 female entrepreneurs who raised more than $1,000,000 for their businesses with Harlem Capital Partners, a diversity-focused VC fund.
So, no, it's not impossible to get your great idea off the ground, but hunting down all the resources available to you can be a lot. So to help you secure the bag during Black Business Month (that's August, in case you didn't know), I'm dropping financial resources basically made for Black business owners to get in on. You got this, bb!
1. Black Business-Focused Incubators
Yes, the moola is super important, but if your idea could use some TLC, an incubator, or organization that injects cash into your company and provides things like office space, insider advice, mentorship, and networking, is a great way to go. "We are like your neonatal unit for the earliest stages of your business," explains Lauren Maillian, CEO of Digital Undivided, an incubator program with a particular focus on businesses created by women of color. "We take founders and embed them into a path that is proven to give them the rigor, resources, education, and—most importantly—the reward of being committed to entrepreneurship and innovation as a leader."
In the past, most accelerators required you to re-locate during your time in the program, but that's not quite the norm anymore. All of that is to say: Don't just look for incubators in your own city—virtual accelerators are a thing too.
And, kind of like a coveted class at a business school, you have to apply to get in. That process usually involves studying the market and your competitors, pointing to opportunities within that space, and pitching how your brand can fill it. "Business owners who clearly articulate that they’re solving a problem differently are the ones with a greater chance of success," adds Maillian.
But don't just apply to any old program. Do your research and make sure the one you select has some success stories and a good track record. Also, you should know that some incubators charge membership fees, while others ask for a percentage of ownership in your company or future profits.
Here are some options recommended by Jarrid Tingle, Co-Founder and Managing Partner of Harlem Capital Partners.
Digital Undivided: This program has a track record of helping women of color turn ideas into businesses.
Techstars: An accelerator for founders looking for mentorship that advocates for digital innovation beyond Silicon Valley and connects entrepreneurs with investors and corporations.
2. Inclusive Venture Capital Funds
Venture capitalists are all about the numbers. Something like a 15 percent return on your investment (or the profit you make from your business minus the cost) might sound good to you, but venture capitalists work with investment partners (that's where the funds come from) who need to be impressed too. VCs are looking for exponential returns well over 15 percent on the initial investment to satisfy all of their business partners.
Ever heard of TikTok, AirBnB, or Resy? Those are the types of ideas VCs are constantly looking for. Don't let the current size of those businesses get you down, though. Remember they all started out small too, but the market opportunity (chance for major growth) was impressive. So before a VC gives you a penny, your business plan has to sound extremely enticing. If that sounds like you, check out Harlem Capital Partners, a diversity-focused fund, and the Fearless Fund, which invests in women of color.
3. Loans from Black-Owned Banks
Whether you've always dreamt of opening a clothing boutique in your hometown or want to own your own salon, you may have heard that a bank loan can help you make it happen. Sadly, research from UC Berkeley shows that some of the algorithm lending programs used by banks to determine who is eligible for a loan show signs of discrimination against minorities. Yeah, even computers, which are programmed by humans, can perpetuate racial bias. So you may want to look into applying for a business loan from a Black-owned bank.
Heads up: When you're applying for a loan, you'll want to make sure you have good credit, you fill out the paperwork correctly (sometimes it can be a little tedious, so take your time), and you're able to prove that your business is already bringing in revenue.
I know that last point can be super hard to prove if you're just getting started, but have you considered pre-orders to boost your revenue quickly without increasing your overhead costs? Take a look at the bonus section below for some more cost-sensitive ways to get your business off the ground before seeking a loan.
4. Angel Investors Who Support Black Entrepreneurs
You can literally think of these investors as guardian angels sent to earth to give your business a jumpstart. Unlike VCs, who will help gather money for your company from investors, angel investors use their own money. Angel investors who focus on the Black community, like the Black Angel Tech Fund, a group that invests in Black ~techpreneurs,~ and the New Voices Fund, which focuses on people of color and the LGBTQ community, are a great place to look.
Once you find your target angel audience, you'll need a thorough business plan to present to them. And, it has to be said: This is the time to b-r-a-g. Show them that you know your sh*t. "It's a delicate balance where you want to be confident. But you also want to be humble," explains Tingle.
5. Crowdfunding Specifically for Black Founders
Don't forget that your parents, aunts and uncles, cousins, and friends can be your business's first investors—and biggest hype men. I'm sure you may have heard of websites like GoFundMe and Kickstarter. Well, there are plenty of others geared toward Black innovators too.
BBNomics is a Black-owned website that's been putting in the work for more than 40 years. To jumpstart your business, you can also look into fundBlackfounders, a place that'll help you create a successful fundraising campaign, and Rise FundNGo, a platform that'll help you launch your funding drive.
6. Grants for Black Business Owners
Grants are free money given out by government programs or corporations, kinda like a scholarship. That's right, you don't have to worry about giving up equity in your business or paying back a debt if you go the grant route. FYI, though, these are a lot harder to come by (because, you know, it's free money).
Programs like Rihanna's Clara Lionel Foundation and Jay-Z’s Shawn Carter Foundation recently gave out millions of dollars in grants to bring relief to areas majorly impacted by COVID-19. If your business was also affected during the pandemic, look into the Doonie Fund, which focuses on Black and Latinx female founders. Also be sure to checkout grants.gov for federal grants or the National Association for the Self Employed (NASE) Growth Grants, a huge resource for small-business owners.
Bonus: Free getting-started resources
Getting the word out about your bomb-ass brand takes money too. But there a ton of free resources you can get in on, like that asking that friend who somehow has 10,000 Insta followers for some love or selling your products on platforms that already have a ton of customers, like Etsy and Amazon.
Also, it's not bad to go old school, cold calling potential customers or door knocking. Remember this is your baby, so do whatever it takes. And if you're struggling with any technical things (like filing for an LLC or creating contracts for employees), use the Minority Business Development Agency as a resource to help you get your feet off the ground.
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