Black Businesses Could Add Billions To The Economy, Says Shopify
According to a new survey from Shopify, Black businesses contribute significantly to the company, yet they still struggle to get funding.
The barriers Black-owned businesses face
Black-owned businesses face many barriers that limit their growth, including a need for more access to capital funding and investments. Not only does this make it harder for them to succeed, but it also limits their growth potential.
Despite racial and social justice movements catalyzing public support for Black businesses over recent years, minority founders have been left with unfulfilled promises of investments from banks, investment firms, and tech companies.
This issue is not limited to a specific place. Lack of access to capital funding impacts minority founders worldwide. Reports have revealed that over the past decade, only 0.25% of venture capital funding has been given to Black entrepreneurs in the U.K. Likewise, in the U.S., approximately 44% of minority founders say they still find it challenging to find funding.
Despite organizations launching initiatives to help develop Black-owned businesses, more needs to be done to give minority-owned businesses a fair chance at success.
According to a McKinsey study, on average, Black-owned businesses have access to $35,000 in capital compared to white-owned companies, which start with $107,000.
Key findings from Shopify’s report
Despite being at an obvious disadvantage, Black businesses are foresighted to contribute approximately $190 billion to the economy, says Shopify.
The knock-on effect of having limited access to resources and capital has been proven to impact minority founders’ mental health.
According to the report, 78% of Black businesses find it challenging to sell their products to customers outside the Black community.
Additionally, many minority founders shared how alone they felt in their entrepreneurial journey, with 61% saying they often feel like it’s them against the world.
Still, Black-owned businesses remain resilient even when all the odds are stacked against them.
Shopify found that Black entrepreneurs remain highly optimistic about the future, with 81% agreeing with the statement: “Ignore the background noise of racism and stigma, or you’ll never get your business off the ground.”
“The public’s increased awareness of social justice movements like Black Lives Matters has led to more tangible support for Black businesses, which has Black entrepreneurs optimistic,” said Brandon Davenport, head of equitable commerce for Shopify, in an online statement.