There’s something we gotta talk about: raising capital and funding a business as a woman, LGBTQ2SA+ or BIPOC person. Did you know that women only receive 4% of venture capital, yet women-led businesses outperform their male counterparts by 63%?(source) Did you know that just 1% of venture-backed founders in the USA are Black?(source) And that approximately 38% of both male and female entrepreneurs raised outside capital to help fund their business but 70% of female LBT (lesbian, bi, trans) entrepreneurs raised less than $750K while 47% of male GBT (gay, bi, trans) entrepreneurs raised more than $2M, mirroring the gender funding gap seen in entrepreneurship in general?(source)
What does this all mean? That women, BIPOC and LGBTQ+ people often have much more difficulty starting or growing their businesses. Many have to look to family for loans, or go through crowdfunding, which can be risky if they don’t hit their funding goals.
Our favourite business plan we’ve heard lately of is looking for funding right now is Golden Gaze BnB. To be built in the gorgeous Golden, BC (if they can get the funding they are hoping for), this business has a simple, yet unique focus: Sustainability, Accessibility, and Inclusivity. Read all about them HERE.
Why are we mentioning Reigh (they/them) and Katie Ring’s (she/her) business? Because it is queer, women AND Black owned! Triple whammy for having difficulty starting a business. As with many businesses owned by BIPOC, queer people, and women, they’re using crowdfunding to try to fund their business idea. They are right near the end of their IndieGoGo funding round, and NEED YOUR HELP. Anything helps! Their campaign ends November 16th!
Their business plan is unique and definitely filling a need in our community. We want to see this happen, and hope you can help make it a reality.
Starting a business as a woman
We know there is still a major gap in pay for women to begin with in the labour force. This doesn’t seem to change when women take the entrepreneurship route and get funding. They have much more difficulty getting funding than their male counterparts, with men four times more likely to secure funding (source)
COVID 19 has had a major impact on women, further widening the gap between men and women not only in the labour force, but as entrepreneurs trying to fund businesses too. Women entrepreneurs are more likely to be found in services industries than in manufacturing or technology, and these sectors are bearing the brunt of disruption with the pandemic (source).
Due to women also usually tending to the home for families, women small business owners often have more domestic responsibilities on top of their professional ones, increasing their risks for burnout and stress. We know that access to childcare has long been an issue for women to reach for the same jobs as men, and this again extends to entrepreneurship and starting a new business.
Over 70% of women entrepreneurs say finding funding is a huge barrier in starting up their own business (source). If we can’t find funding, it’s nearly impossible to get our ideas to become a reality. Funding is necessary for early product development and market research, and then more is needed for branding and launching the business. Many funding programs and government investments focus on technological innovation, which further excludes the majority of women-led businesses as they are typically found in service industries (source).
Getting funding as an LGBTQ+ person
LGBTQ2S+ business enterprises make up less than 1% of American business enterprises (source). This small statistic is more likely due to an inability to identify your business as LGBTQ2S+ for multiple reasons, including homophobia in the business world. These risks of just identifying your business as LGBTQ2S+ present the issue of why getting funded is such a problem for LGBTQ2S+ enterprises; on the flip side, LGBTQ2S+ enterprises contribute over $1.7 billion back to the economy, showing how important it is to support LGBTQ2S+ small businesses (source).
Though many businesses wave their pride flags when it comes with good PR, it is still a reality that LGBTQ+ people still face discrimination in the workforce. Trans people, for example, and especially when those people are also racialized, still face a lot of barriers entering the business world. Transgender and nonbinary folks already face barriers to earn a living. Over 31% of the population live in poverty, 11% are unemployed, and 23% have been fired due to their identity (source). So with the risk involved in trying to secure funding, and the alternative being to self-fund, there is a big roadblock transgender people have to get past.
Being Black or Indigenous in Canada and getting funding
Recently, Canada announced a program to help Black entrepreneurs. Ottawa is giving close to $33 million (plus funds from banks) to create a new Black entrepreneurship loan program which will provide Black entrepreneurs with loans between $25,000 and $250,000 (source). Why? There is no doubt that in our country there are barriers to funding for Black entrepreneurs.
For Indigenous-owned businesses looking to get funding, things aren’t much better. Aboriginal firms rely heavily on personal savings for start-up and ongoing financing (the latter together with retained earnings) as 45% of Aboringinal firms have difficulty meeting the qualifications and requirements for lending (source). On top of that, many Aboriginal business’s communities don’t have the same digital access, which is very important not only for running a business, but for researching and applying for funding and grants. 4 in 10 Aboriginal businesses have either no internet connection or an unreliable connection (source).
So what do we do?
This problem isn’t going to magically disappear, and equality for gender and race is not going to suddenly happen tomorrow. We ALL need to work on this problem if we’re going to be able to make even a bit of a difference.
So, what can you do to support BIPOC, LGBTQ+ and women-led businesses get funding?
Donate to their funding campaigns!
Share these statistics, get talking about it!
Buy from their businesses as much as you can
Educate others on difficulties of starting a small business as BIPOC+LGBTQ+ and getting your community involved
Encourage and uplift the dreams and goals of BIPOC, LGBTQ+ and women
If you are a venture capitalist or looking to fund businesses, one of the things you can do is to expand your network! Find ways to mingle and meet people who are not like you at all. Not just in how they look or where they live, but their educational background, politics, and income level. Identify and actively talk through your biases that you encounter - either aloud with partners, or through journaling. We can’t break down our ingrained biases unless we face them head on.