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If you identify as a Black woman and live in the United States, listen up: our cohort is among the fastest-growing demographics for entrepreneurs in America. According to the recent survey Black Entrepreneurs – 2021 Trends, conducted by Guidant Financial and the Small Business Trends Alliance, “…women [make] up 46% of Black entrepreneurs, this group shows one of the highest percentages of female small business owners in any segment – 53% higher than white small business owners.” Meanwhile, an article published this year in the Harvard Business Review, “Black Women Are More Likely to Start a Business than White Men,” stated that fully 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.
The founder and managing partner of Backstage Capital — a venture capital firm that focuses on investing exclusively in startups led by underestimated founders — Arlan Hamilton, who identifies as a lesbian Black woman, formed her VC fund in 2015 when she was homeless and living on food stamps. With no formal education other than a high school diploma, she set out to create change that would ultimately disrupt the VC world and empower underrepresented and underestimated entrepreneurs, including founders that identify as women, people of color and LGBTQ+.
Like many Black women entrepreneurs, Hamilton received a lot of “No”s before connecting with the first angel investor that believed in her mission and vision. She now runs a $36 million-plus VC fund that has invested in more than 180 companies (and counting). And just like Hamilton, you might have been underestimated, looked over or maybe not even looked at because of two factors: gender and skin color. But, as the landscape of entrepreneurship changes in this country (part of what’s fueling The Great Resignation is that more Black women are leaning into their power), opportunities have followed, and it’s prime time for us to be a catalyst for real diversity and change via business ownership.
Here are four qualities that could make you the next rising star.
If you don’t know Hamilton’s story, it’s remarkable. (Treat yourself to this video.) A little further study revealed that she and I had a few things in common. We are Black women raised by a single mother, and both moved around a lot. We are also entrepreneurs who have been underestimated, homeless, lived on government assistance and, ironically, attended the same high school in Richardson, Texas. (“Go Wildcats!”) Unfortunately, these shared background aspects are all too common, yet through absolute will and determination, we managed to build thriving businesses with little or no funding.
Less than 10% of all venture capital deals go to women, people of color and LGBTQ+ founders, but thanks to Hamilton’s spotlight on this underrepresented business segment, and through her company, conditions are changing. To be sure, receiving adequate funding for a startup is still difficult for most Black women, but it is more likely these days. By doing due diligence and being open and willing to make the right moves and connections, it’s more possible than ever to find the right type of capital to build a venture, whether you need $5,000 or $5 million.
Key questions for prospective owners should include, “Why are you starting this business?” and “Who are you serving, and why?” You must be able to answer these as effortlessly as you offer your first and last name, because at the end of the day, customers are the lifeblood of a business, and having intimate knowledge of their needs (and how you can address them) is paramount to success.
At the same time, be a student of your industry — constantly learning and ensuring that you are creating the best customer journey and experience. And finally, know your numbers inside out. Be brutally honest about assessing expenses, burn rates, runway, cash flow and projections. We’ve all watched episodes of Shark Tank where a business owner is doing well, then fumbles over the financials. So, know the numbers, especially if you’re seeking external sources of funding.
As queen mother RuPaul was famously quoted as saying, “If you can’t love yourself, how in the hell are you gonna’ love somebody else?” A commitment to bet on ourselves is one of the most critical factors of being a successful entrepreneur. Despite racism, microaggressions or the other myriad of issues we as Black women endure (including stares and glares when we walk into a room in which we’re perceived as not belonging), own your space — believe you have every right to be exactly where you are and show up fully for yourself. Further, believe in your vision and what you can uniquely provide. Many of us are “firsts”, “onlys” or “different” (or “F.O.D.s”, as coined by Shonda Rhimes) in various instances in our lives, and most certainly when attempting to forge a new path in business, as Hamilton has. An unwavering belief in yourself will be the fuel that propels you in the best or worst of circumstances.
Like Hamilton, in the beginning, I got a lot of negative responses. “No” is simply part of the process, though, and actually helps redirect you to the right path and to the right people who will believe in you and your business. You only need one “Yes” to change your life, so don’t give up.
As Hamilton states in her 2020 book, It’s About Damn Time: How to Turn Being Underestimated into Your Greatest Advantage, if you can’t imagine a future without your business or service, it’s incumbent upon you to make it happen. This is true for yourself and for the countless others needing representation who look just like you. I can’t imagine a world where Backstage Capital doesn’t exist, and thankfully, I don’t have to, because she insisted upon bringing us a new era of what a VC could be in mind, body and spirit.
While there’s still a mountain of risk and uncertainty to surmount, the landscape is being leveled… one Black woman entrepreneur and successful business at a time. So, take heart that you’re not traveling alone, and until the path is well worn and beautifully paved, remember to be a guide and reach back and help someone on their journey. Who knows, maybe one day I will be writing about you.