Entrepreneurs will likely play a key role in our recovery from COVID-19 in terms of driving innovation and making the world more prepared for a future pandemic. For this reason, it is important now more than ever to support the full gamut of potential entrepreneurs.
Unfortunately, people who wish to establish their own companies face many roadblocks. These hurdles can prove especially difficult to overcome for women and people of color. “Inclusive entrepreneurship” involves the adoption of new policies and the creation of new opportunities to make entrepreneurship a real possibility for anyone with the necessary passion, no matter their background. Championing inclusive entrepreneurship means working with underrepresented communities to create solutions.
Using Community Programs to Bolster Inclusivity
Working directly with communities can create progress toward inclusive entrepreneurship. One of the best examples of this comes from Hartford, Connecticut. Sabrina Tucker-Barrett worked for a local insurance company but realized that local insurers were having a hard time finding well-qualified employees to fill positions. She observed that local schools weren’t providing adequate training and founded an organization called Girls for Technology, which provides science, technology, engineering, and math (STEM) education for young women. Recently, the program challenged participants to engineer a chat bot that would address a concern in their own communities.
Four young women who completed this assignment subsequently traveled to Silicon Valley to pitch an idea to Facebook based on the chatbot they created. The result was the creation of a computer program designed to help young Black people in the United States prepare for their first jobs. The program gives guidance on success in the workplace and received recognition from Facebook for its real-world impact.
Recognizing that this achievement grew out of a community program designed to expand opportunities for high schoolers is important and shows how empowering such programming can be. That’s because no one understands the issues faced by a community better than the people in that community.
Addressing the Issue of Entrepreneurial Skills Training
The Girls for Technology program addresses one of the biggest issues facing communities systematically excluded from entrepreneurship: attaining the necessary technical skills. In addition, would-be entrepreneurs also need a clear understanding of what is involved with launching and building a business from the ground up. This process involves everything from bookkeeping to finding investors—topics that often aren’t even taught in business school classes. Community programs are a great way to connect people with ideas to the more experienced entrepreneurs and business owners who can mentor them.
Across the country, many organizations provide support directly for women and people of color who are trying to get their businesses off the ground. One such program is the Women’s Business Development Council, which connects women to one-on-one entrepreneurship coaching while also hosing training programs and workshops that teach essential business and management skills.
While these programs have helped launch many programs and raise millions of dollars in funding, they represent only a small percentage of all incubator and accelerator programs. Importantly, many of the organizations are grassroots initiatives, such as the Build Institute in Detroit, which has trained more than 1,800 aspiring entrepreneurs since its inception in 2012. These grassroots organizations meet people in their own communities rather than forcing them to relocate to get the training they need—something that’s simply not feasible for many people.
Increasing Access to Business Funding Within Communities
Another challenge for women and people of color interested in entrepreneurship is funding. Of course, funding is a problem for all entrepreneurs, but it can be even more difficult to secure for people from communities that are underrepresented in entrepreneurship. A 2019 study by RateMyInvestor and DiversityVC illustrated this disparity in venture capital funding. The study found that only 1% of venture-backed founders were black, women-led startups received just 9% of investments, and Latinx founders represented just 1.8% of founders receiving VC funding.
To secure startup capital, many people end up turning to savings or help from family and friends, but the racial wealth gaps that persist in the US make this difficult. For instance, in 2016, the net worth of the average white family was $171,000—almost ten times more than that of the average black family ($17,150). People from disadvantaged communities often have no access to networks of wealth and little or no social capital they can leverage to start the conversation. As a result, even excellent ideas can stall out, since launching a business with no funding is virtually impossible, especially for people with little or no entrepreneurial training.
Some community-based sources of startup capital have begun to promote inclusive entrepreneurship, but many more will be needed moving forward. Some notable examples include ProsperUS and Michigan Women Forward, both of which provide microfinancing to small businesses owned by minorities.
However, the majority of startup funding sources do not put any kind of emphasis on supporting entrepreneurs from underrepresented groups. Very few build ties with these communities and foster the sort of engagement that can create real change at the community level. Moving forward, it will be increasingly important to develop such community-based programs. This is especially true given that new businesses in high-growth industries account for about half of new job creation in urban areas. Moreover, with the staggering unemployment levels we’re seeing during the covid-19 pandemic, new jobs are badly needed for economic recovery.