Black women are used to being invisible. And yet, we continue to forge ahead in many sectors of industry across the country, despite being ignored and left behind by funders. One such industry is technology—which is missing a huge opportunity to capitalize on investing in black women. Black women are the fastest-growing group of entrepreneurs in the country. According to the the 2011 U.S. Census Bureau, we are also the most educated people in the country, the highest percentage of any group enrolled in college and part of the largest and most engaged group of early tech adopters. All of this should make us an easy sell to venture capitalists looking to invest in startups run by black women. But investors simply don’t seem to be interested.
The fact that black women are educated and entrepreneurial yet so underfunded is a confluence of broadening thoughts of diversity, use of technology, and economic policy. The Small Business Jobs Act of 2010 increased limits for tax write-offs for startups, such as the ability to deduct cell phone bills and depreciation, and health care costs. This was great news for black women, who tend to be younger when they found their companies, have more debt, and less access to capital. Black women have greater difficulty receiving funding from investors and creditors, and difficulty securing lending due to racial bias.
But tax write-offs don’t make up for the funding gap. When black women are funded, they get the short end of the stick, with the average raise round totaling just $36,000. Compare that figure to the composite of the average white male startup founder, who banks an average of $1.3 million in funding.
As usual, so much of this is about race and gender. White men are understood as the default experts for literally everything (there was even a recent political philosophy journal that published an issue about Black Lives Matter without a single black person’s perspective) so it’s hard for women, and especially black women, to be seen as credible in any field and, particularly, technology. Which is really so unfortunate because this lack of investment in diversity also means a lack of innovation and fresh ideas. And much of this comes down to networks. If a black woman doesn’t have access to networks to fund her idea, it doesn’t matter how great the idea is.
White men often have access to traditional networks that black women do not. Even if they are cash-strapped themselves, they are more likely to have a friend of a friend or access to a contact who can provide a link to venture networks. Without access to traditional venture networks, black women are forced to work harder and with greater difficulty to get their products known—with varying results.
Without this “machine [backing from big venture capital firms that can turn products and their founders into stars],” a founder has to work harder to get the word out about a product that hasn’t been adequately cosigned by the tech elite, which makes an already uphill climb even more difficult. According to digitalundivided’s Project Diane, more than 50% of black female founders received less than $100,000 in funding, which implies that these women are tapping resources outside of traditional venture networks such as loans from family and friends, retirement accounts, credit cards, and personal savings.
All of this really means that it is ultimately the tech sector that is robbed of its own potential revenue by not investing in this demographic. Black women are an integral part of society—both in terms of spending power and in terms of our own engagement in technology use. Companies do themselves more harm than good by continuing to rely on the same old demographics for investment and advertising.
Considering that the nation will be majority minority by 2044, blacks are the largest and most engaged group of early tech adopters, black spending power is at $1.25 trillion, and Hispanic buying power is at $1.3 trillion (which includes those identifying as Afro-Latinos), it would be wise to invest in these businesses for the good probability of return on investment. This demographic determines the “cool” factor of a product once released, and provides access to influencers and a group that can determine the next “it” technology.
When will society actually learn that there is no progress without black women? Women of color get a despicable 0.2 percent of all venture funding in the tech industry. Continuing to fund us at such miserable rates will only do damage to the field and make it less creative and sustainable in the long run.