Black Women Rising: It's Time to Support Our Fastest Growing Group of Entrepreneurs
For the better part of the past decade entrepreneurship has been steadily increasing in America—with Black people playing an important role in that growth. Black women in particular have been disproportionately leaving the corporate world to become the fastest-growing group of entrepreneurs in the country. According to a report by JP Morgan Chase, the number of businesses owned by Black women grew 50% from 2014 to 2019. And we accounted for 42% of all women who started a business during that time.
During the pandemic, 17% of Black women said they were “in the process” of starting a new business compared to just 10% of white women and 15% of white men. While these stats are impressive and show the resilience and determination of Black women, we are 2X as likely to be turned down for business loans; further, only 3% of Black women founders are running mature businesses. Starting a business, raising capital, and growing a business is challenging for any entrepreneur, but for Black women it is an uphill battle.
At LinkedIn, our vision is to create economic opportunity for every member of the global workforce. The influx of Black women entrepreneurs presents a unique opportunity to fulfill our commitment by supporting the fastest-growing group of entrepreneurs. Black women are building remarkable startups with amazing potential. For those eager to see meaningful progress in funding for women and diverse owned businesses, investment in Black women entrepreneurs offers a path to catalyze a more equitable, inclusive funding and support ecosystem.
Black Women: From Office Job to Entrepreneurs
Earlier this year, LinkedIn surveyed 1000 Black founders to better understand why Black people are leaving their corporate jobs to pursue entrepreneurship. With a goal of providing insights and resources to help Black founders build strong networks and connections to potential customers, we sought to understand the lived experience of Black women - our challenges, opportunities and the resources needed to build.
What we discovered is that Black women are multi-hyphenate entrepreneurs who pursue multiple professions and projects simultaneously as a means to create economic opportunity. For Black women entrepreneurs, the decision to leave corporate America and start businesses is based on several factors–from financial security, to flexibility, to job fulfillment and career growth. Data from the survey shows that 43% of Black entrepreneurs are motivated to become entrepreneurs to create generational wealth for their families. When we look at Black women specifically, 35% pursue entrepreneurship to create additional income for our families and to create generational wealth.
For many Black women, part of creating additional income means juggling a 9-5 job as well as an additional business or side hustle. Nearly half of Black women entrepreneurs said that the shift to remote work facilitated their pursuit of business ventures. However, that freedom comes with its own set of challenges. 33% of Black women entrepreneurs with full time jobs feel they’ve been overlooked for career advancement opportunities because they have an additional business. Ultimately, many Black women professionals hope to turn their personal business ventures into full time jobs. The number one reason is flexibility. Amidst the pandemic, 56% of Black women founders pursued entrepreneurship to have more flexibility and control over their schedule.
Access to Information and Capital are Key—But Black Women Entrepreneurs Don’t Know Where to Go
Building a business requires dedication, perseverance, resilience and patience. It requires raising capital, and investing in the skills necessary to propel business forward. This is no simple feat for any founder, much less for Black women founders. Our survey revealed that nearly 1 in 2 Black women did not know where to go for information when starting their own business.
Sourcing startup funding is also a major obstacle. While 40% of Black women founders cite access to funding as key to growing their business, of the challenges in Black women’s entrepreneurship journey, accessing capital (33%) and personal debt (33%) are at the top of the list. According to ProjectDiane, a biennial study on the state of Black and Latinx women founders conducted by digitalundivided, 0.27% of the total venture capital investment went to Black women between 2018 and 2019. This is not surprising as our survey found that 74% of Black women entrepreneurs have not had a funding conversation with an institutional investor or VC.
Building a network and fostering communities that can deliver capital, mentorship, and timely knowledge are vital and presents an opportunity for LinkedIn to support. It is also an opportunity for the funding ecosystem to step up and address the persistent underfunding of women entrepreneurs. Despite these significant obstacles, Black women demonstrate determination, ingenuity and resilience, bootstrapping our businesses with personal savings (61%), credit cards/loans (35%) and borrowing from friends and family (27%). If we care about fostering an inclusive ecosystem, a different approach is warranted, one that provides equitable access to the level of funding required to scale business meaningfully, including angel and institutional investment.
No One Goes It Alone: The Importance of a Strong Network + Skills
Access to a strong network, mentors and advisors are also critical for entrepreneurs as networks help foster growth and create a community for support and development. As we say, “your network is your net worth.” That’s why along with access to capital, Black women founders consider having a strong network one of the top attributes contributing to the success of a venture. Our survey found that 58% of Black women business owners believe they would be more successful if they had a stronger network; and nearly a quarter of them also said that a lack of mentorship and a limited network is one of their top challenges.
I’m so proud that our annual TransformHer event and online TransformHer community supports Black women entrepreneurs and the venture capital community that sees the value of investing in women of color. Last year, we also held our inaugural INFused event to gather Black creators on LinkedIn, providing the tools to connect, inspire, and engage your audiences. This connects to our LinkedIn Creator Accelerator Program that invested $25 million to help creators build their audience and amplify their voice. We are leveraging our platform to amplify the voices of Black women who are creating companies of scale and potential and engaging in platform discussions. These community initiatives are essential. 42% of Black women business owners seek out family, friends, colleagues, and community groups for advice. Nearly 1 in 3 Black women entrepreneurs (31%) find their support network via online communities like LinkedIn. Of those who are part of an entrepreneurship group/network, these groups have helped them feel supported (73%), gain the skills they need to grow as an entrepreneur (68%) and feel a stronger sense of belonging (64%).
Black women are the most educated bloc of Americans. We are consistently doing the work to invest in ourselves, upleveling our businesses and communities. Organizations can tap into that ambition by delivering useful and timely knowledge. Among survey respondents, 39% of Black women founders said that business management/planning, and/or soft skills was the top skill they wanted to learn.
For Black women, entrepreneurship is a passion. It is a means to create economic opportunity and to build generational wealth. The outcome we are committed to is equity. If we care about equity, we must overcome long standing systemic issues, investing time, energy, network support and funding. Black women are building remarkable startups with amazing potential and scale. This is the compelling leadership opportunity at the heart of this work.