U.S: Women of colour are the fastest growing group of entrepreneurs

Author Moonshot.news

Published on: 19/05/2021

Black women are more likely to start a business than white men and white women but they struggle to get funding, according to a new study, a summary of which was published in the Harvard Business Review.

In the United States, 17% of Black women are in the process of starting or running new businesses, compared to just 10% of white women and 15% of white men, found the study, based on data from a survey of 12,000 people.

At the same time though, only 3% of Black women surveyed were running a “mature” business more than three and a half years old, according to the study that was conducted by professors at Babson College in partnership with the Global Entrepreneurship Monitor.

Fortune magazine wrote that Babson College assistant professor Angela Randolph, who co-authored the research, partly blamed funding for this disparity. Part of the reason, noted Randolph, “is that 61% of Black women entrepreneurs self-fund their ventures, even though only 29% of Black women entrepreneurs belong to a household with total income greater than $75,000.”

This lack of personal capital, along with less access to private funding or loans, means women in general, and Black women in particular, have less money to start and run their own businesses, said Randolph.

Women of colour are the fastest growing group of entrepreneurs

A 2019 study in the U.S. had shown that women of colour are among the fastest growing group of entrepreneurs, accounting for 50% of all women-owned businesses. An estimated 6.4 million women of color-owned businesses employed nearly 2.4 million people and generated $422.5 billion in revenue.

African American women-owned businesses represented the highest rate of growth of any group in the number of firms between 2014 and 2019 as well as between 2018 and 2019. They started 42% of net new women-owned businesses, which is three times their share of the female population (14%).

Women and minority-led small businesses hardest hit by the pandemic

However, a recent report by Facebook and the Small Business Roundtable found that minority and women-owned small businesses were hit the hardest by the pandemic and are struggling despite the signs of recovery that the U.S. economy shows.

According to the report, which surveyed more than 35,000 small business owners across 27 countries and territories in February 2021, in the U.S. 22% had closed their businesses. And the problem is bigger for minority-owned businesses where 27% were closed. In the group of minority-owned businesses, Black-owned businesses were the most likely to be closed by a large margin.