10 Valuable Resources For Minority-Owned Businesses Looking For Funding
Funding is one of the biggest challenges growing businesses need to address.
November 15, 2017 at 3:51 am
Entrepreneurship among minorities is steadily on the rise; a progress which remains consistent even in the wake of a history wrought with the marginalization of minority business owners – especially within the tech industry.
Ironic, isn’t it? Our most innovative industry still to this day paradoxically remains the most antiquated when it boils down to workforce diversification.
The truth of the matter is that despite the consistent uptick in minority startups year over year, the simple fact remains that there are few minority entrepreneurs that get funding (Rapper Will.I.Am’s recently raised $117 million as an African American) due to VC’s investing based on algorithms and past patterns, as one recent Fast Company article, featuring Clarence Bethea of Upsie, shared so eloquently.
However, if you’re a minority looking to leave your mark on the world, good news is on the horizon. In the face of overwhelming odds, the business world at large, including Silicon Valley, has been forced to reckon with addressing issues of inequality.
As a result, now more than ever there is an abundance of resources in both the Federal and private sectors specifically designed to help bridge the gap between minority startups. So, rest assured, there’s nowhere to go but up.
Insights on Minority Entrepreneurship
It’s no secret that minority women get hit the hardest when it comes to marginalization within the business sector. In fact, a recent study showed that minority women were the “least represented” demographic in the tech industry.
Further expounding on this, we find recent data from the National Center for Women in IT shows the lowest instance of women minorities is that of Hispanic women, who make up a meager 1 percent of the tech industry. African American women are represented at three times this amount – at 3 percent – and Asian women represent four times that of Hispanic women – at 4 percent.
This marginalization remains in the face of surmounting evidence proving the innumerable benefits that women entrepreneurs have on business operations. One recent study found that women entrepreneurs needed half the money to found a business when compared with their male counterparts.
So what does that number boil down to exactly? Well, most women reported starting their business with just around $10,000.
Interestingly enough, research found that African American women were noted a being the fastest growing demographic of entrepreneurs in US, experiencing a growth rate of 322 percent since 1997.
The University of New Hampshire found that minorities made up approximately 34 percent of new entrepreneurs, yet comprised just “8.5 percent of founders pitching their businesses to angel investors”.
The truth of the matter is that time and time again statistics show that minority entrepreneurs are simply less likely to receive investments than their peers with “15 percent of minority-owned firms successfully translating a pitch into dollar bills, compared to 22 percent of all businesses”.
However as in most situations in life, contrast is often met with light. To combat the inequality, many individual companies and organizations are stepping up to make a difference in the lives of our minority leaders.
So if you’re looking for some insight on various resources that you can use to help jumpstart your business, look no further than these next few lines to find our top 10 picks of the best opportunities for advancement out there.
Federal Resources & Opportunities
1. Minority Business Development Agency (MBDA)
The MBDA is an agency put in place through the US Department of Commerce to promote the “growth and competitiveness” of minority businesses “including Latino, Asian, and African-American businesses”.
They provide various resources such as access to capital, contract opportunities and more for minority led businesses of all sizes. Furthermore, they offer several grant opportunities and their Millennials Entrepreneurs Redefined program provides networking, mentorship and dynamic workshops on subjects of “business development, marketing and outreach, legal, finance and accounting, as well as pitch perfection”.
2. Department of Transportation Disadvantaged Business Enterprise Certification
The DOT’s Disadvantaged Business Enterprise (DBE) program was put into place to ensure all businesses are able to compete for federally funded transportation contracts. It was originally created in 1980 as a minority and women’s enterprise program as the result of the Office of Civil Rights.
In order to qualify as a DBE, there are several factors a small business must meet, one of which being that at least 51 percent of the business is owned by one or more individuals who are socially/economically disadvantaged.
Benefits of certification are innumerable as they come with access to “set-asides” among other things. Many government projects must set aside a portion of their contracts for DBEs and upon certification, your business gains access to these.
Other benefits include both technical and financial assistance as the programs often provide “low-interest loans or grants, or they may provide loan guarantees” or short-term loans for the purpose of covering “unforeseen cash emergencies”.
3. SBA (HUBZone) Certification
The Small Business Administration (SBA) is a federal agency that is put in place in order to help provide programs of support for entrepreneurs and small businesses. The agency has a history of delivering “millions of loans, loan guarantees, contracts, counseling sessions and other forms of assistance” to qualified small businesses all over the country.
The SBAs HUBZone Program was put in place in order to help small businesses in underprivileged locations receive preferential access to “federal procurement opportunities”. This not only serves to benefits the businesses themselves, but to also help bolster the local economy in which they are contained.
4. New Market Tax Credit (NMTC)
The US Department of Treasury’s Community Development Financial Institutions Fund (CDFI) has a program by the name of the New Market Tax Credit (NMTC) which is put in place to “incentivize community development and economic growth through the use of tax credits that attract private investment to distressed communities.”
In order to qualify for NMYC, applicants must qualify as a Community Development Entity (CDE) and receive CDE Certification . A CDE is considered a domestic corporation or partnership that serves in an intermediary capacity for “the provision of loans, investments, or financial counseling in low-income communities”.
5. Empowerment Zone Employment Credit
The Employment Zone Credit is an attempt to incentivize businesses that are located in EZ Zone locations or “distressed urban and rural areas…in need of renewal and restoration” to not only remain in these areas, but to also employ local talent.
In the event a business operates in a designated EZ Zone and employs individuals within that zone, they can qualify for a 20 percent credit on the first “$15,000 of wages per eligible employee each year for a maximum annual credit per qualified employee of $3,000”.
Private Resources & Opportunities
HackNation is an organization dedicated to connecting “underrepresented entrepreneurs” to various resources to “bridge the gap to access and opportunity in historically underserved communities worldwide”. They offer resources such as business advising, project management and help to match up various businesses with each other pending their needs and services.
They also put on several awesome projects and events, including Seattle Startup Week — a five-day celebration of the “flourishing startup community” and PitchBlack, a national pitch competition where entrepreneurs receive five minutes to pitch and discuss their story.
The event has provided opportunity to countless minority entrepreneurs, including most recently Dr. Tina Coleman, founder of CNA to MD – a program dedicated to promoting the advancement of minority individuals into careers in healthcare.
Kenny Shelton stated "Our job is to provide the resources and platform to strengthen and showcase the untapped entrepreneurial genius in our communities. Too many of our stories are going untold and viable business ideas falling on deaf ears".
7. Techstars Foundation
The Techstars Foundation makes our list and was only just founded in 2015. However, within the span of those two years, the organization has worked hard to prove its “commitment to increasing diversity in entrepreneurship”.
The foundation has helped several innovative small businesses with grant money and empowerment through their network in order to help them achieve their goals.
CODE2040 is comprised of a community of Black and Latino technologists who are dedicated to creating “access, awareness, and opportunities for top Black and Latino/a engineering talent to ensure their leadership in tech”.
The organization provides assistance for both students and companies alike, as well as offers a residency program for budding entrepreneurs.
9. 500 Startups
500 Startups finds its roots in the strong belief that “great founders come in all shades, genders and nationalities”. Since the beginning, the organization’s mission has been focused on finding and empowering talented startup founders both domestically and internationally.
They offer killer master classes, seed programs, and an awesome Series A Program dedicated to help “seed-funded companies build a scalable and repeatable marketing functions”. Other opportunities include their exclusive, invite-only Demo Day – an event dedicated to giving top-tier investors, corporate strategists and press a sneak peek of their chosen accelerator startups.
10. Black Founders
BlackFounders was created with a mission to help promote the advancement of successful black entrepreneurs in technology.
They offer events, conferences, funding opportunities and even hackathons dedicated to providing students at HBCUs the opportunity to “flex their coding skills while working together to build mobile apps and web software” while also being able to “connect with tech companies hiring for open positions”.
The organization prides itself in creating “an ecosystem that stimulates tech entrepreneurship and fosters economic growth” by equipping entrepreneurs, inspiring innovation and sharing resources.
While it may be true that minorities are vastly underrepresented in the business sector, the truth remains that progress is ever-growing. Fortunately, there are numerous resources that underrepresented individuals can take advantage of in order to help jumpstart their path to entrepreneurship and level the playing field.
With a plethora of both federal and private sector opportunities for advancement available, now more than ever is the best time to jump in and make a difference in society. So stop being another failed statistic and get out there and make a difference in your community today.