Addressing the Survival and Funding Gap

More than 80% of Black-owned businesses close within 18 months . These businesses often lack the capital, mentorship, and institutional access required to build sustainably.

Founders face barriers at every stage:

• Only 1% receive business loans in their first year

• 50% less likely to secure full financing, even with strong credit

• 44% self-fund entirely with personal cash

• 37.9% are discouraged from applying for loans at all

This is the environment many Black founders are expected to build within. The failure rate is not caused by a lack of skill or ideas. It is the result of consistent undercapitalization and lack of infrastructure.

Is Venture Capital the answer? Yes, maybe, but also no.

Venture capital is often portrayed as the solution for startup success. But for most Black founders, it remains distant and inaccessible.

In Q3 of 2023, Black founders received only 0.13% of all U.S. venture capital—$39.7 million out of nearly $30 billion. That’s a sharp drop from the already-low 1.2% in Q3 of the previous year.

• Fewer Black professionals are entering venture capital

• Only 17% were promoted in the past year

• Just 24% believe promotion is even viable in their firms

• Black fund managers raise smaller funds, have longer timelines, and are often locked out of institutional capital

The funding ecosystem is failing to support Black founders and the Black investors within it.

Invisible Requirements: The Real Filters

Black investors in VC often hold more experience than their peers, yet remain in fewer senior roles.

• Black women in VC average more years of experience, but are still less likely to lead decision-making

• 72% of Black investors hold graduate degrees

• Nearly 40% come from Ivy League or elite schools

This reveals a key reality: decision-making power in venture capital is concentrated among a narrow circle of credentialed, well-networked individuals. For most founders, particularly Black women and non-binary entrepreneurs, this makes VC less of an open door and more of a locked room.

The Role of Grants

Grants can be a lifeline for Black-owned businesses, particularly those led by Black women and non-binary founders, providing essential capital to initiate and sustain growth.

This can be especially necessary for early-stage startups that need to preserve capital and maintain control over their business direction. For Black entrepreneurs, who often face systemic barriers to traditional financing methods, grants provide a critical source of funding that can help cover initial costs, fund product development, and support efforts to bring their businesses to market.

Realizing the Potential of Black-Owned Ventures

If Black women-led businesses earned on par with male-owned businesses, it would add $1.5 trillion to the U.S. economy. That figure isn’t hypothetical because it reflects what’s being lost when capital doesn’t reach the communities that are ready to build.

Funding Black founders means creating jobs, driving innovation, and supporting solutions rooted in lived experience. When we fund Black businesses, entire ecosystems grow stronger.

💡 Key Takeaways:

• The low survival rate of Black-owned businesses is directly tied to capital access, not capability
  
  

• Venture capital remains inaccessible to most Black founders and Black fund managers alike
  
  

• Grants provide necessary early-stage funding while preserving control
  
  

• New alternatives like revenue-based financing are growing, but still rare
  
  

• Funding Black women founders is not charity. It’s one of the most economically powerful decisions any ecosystem can make

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Sources: For more detailed statistics and insights, refer to articles on TechCrunch, BLCK VC, and Forbes.