Black Digital Entrepreneurship Could Close The Wealth Gap, Survey Finds
A survey by the Black Innovation Alliance reveals that Black entrepreneurs are creating more wealth through digital businesses, closing the gap usually faced.
Black Innovation Alliance (BIA) reported that the survey findings breathe new life into their belief that the digital economy could serve as a leveler for the Black community.
Black people receive approximately 1% of venture capital funding, although they comprise 13% of the US population.
However, the findings show that emerging technologies will create new wealth and digital worlds for the Black community.
Black Liberation and the Digital Economy
Digital Entrepreneurship is one of the most significant types of entrepreneurship in today’s world, involving the internet and novel digital technologies.
With digital entrepreneurship, people can reach individuals worldwide while using organic marketing tactics to build a customer base without spending a fortune.
(BIA) launched Black Liberation and the Digital Economy (BLADE) as an initiative to assess how Black people leverage the digital economy to win.
The survey, named The BLADE Blueprint, consisted of 900 Black digital entrepreneurs to observe how digital business positively changes the economic landscape.
The report pinpoints eight critical domains of digital wealth generation: Content Creation, Decentralized Finance, Development, E-commerce, Gaming and E-sports, Professional Services, Publishing, and Media.
It also focuses on Education, Community Development, and activism.
The road to closing the wealth gap
The BLADE Blueprint found that going digital consistently puts Black entrepreneurs on the road toward closing the wealth gap.
Most (77%) Black digital entrepreneurs surveyed reported profitable businesses. By contrast, 54% of small businesses owned by people of color and 66% of all small businesses are profitable, according to Gudiant Fianncial’s 2023 reports.
Over 8 in 10 (84%) entrepreneurs also reported having a positive net worth. This was mostly driven by the earnings from their digital business, as 74% of the entrepreneurs did not have a second stream of income or second job and were paying themselves.
Despite almost half of American startups failing in the first five years, the participants in the study revealed that 56% of them are running businesses that are five years or older.
The BLADE Blueprint also found that Black digital entrepreneurs within Black Innovation Alliance’s extended network outperform their peers at securing venture capital.
Over a fifth of the Black digital entrepreneurs who responded to the survey had secured venture funding, compared to Black founders, usually receiving only 1% of total venture funding.
The Gender Differences
Black men’s digital startups were found to reach profitability more frequently and more quickly than Black women’s.
Black male digital entrepreneurs were likelier to report a positive net worth, have a spouse, and earn higher household income than their female peers.
In comparison, Black women were more likely to self-fund and less likely to have co-founders. They were also less likely to participate in accelerator programs and pitch competitions than their male peers.
Recommendations
The report states that one easy change we can all make is to reframe digital business and startup conversations from being almost exclusively focused on tech-focused businesses.
Instead, it should be focused on tech-enabled businesses as it makes it a more inclusive conversation.
A second recommendation lies in redefining Black business success.
Rather than pointing to quantitative measures like job creation, the research revealed that Black entrepreneurs focus more on quality-of-life outcomes.
Smarter funding, blueprints, guides and tools, strategic brand and platform partnerships, and holistic support were recommendations for Black digital entrepreneurs.
