Startup Money For Minority Owned Business – Diane Yu founded Medengeni Capital in July 2019, with a mission to advance healthcare by cultivating businesses with innovative products and technology. She is a results-driven entrepreneur, venture capitalist and angel investor with over 15 years of experience in corporate acquisitions, expansions and turnarounds, with a passion for delivering exceptional results. Her mission is to effectively use her network, community leadership and professional skills to help women and diverse entrepreneurs.
Despite being an important factor in the future of the US economy, people of color are disproportionately disadvantaged by their lack of access to capital. While diversity and inclusion initiatives abound in Silicon Valley, the reality is that access to finance remains a closely guarded door to success – and today’s venture capitalists are missing the point when it comes to spending money rather than to convey their message. American entrepreneurship is changing and it’s time investors took notice.
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According to the US Census Bureau, the non-white population in the US is expected to rise to 56% of the total population by 2060, and the tech world is sure to follow suit; MBDA predicts that by 2044, this demographic shift will position minority-owned businesses as an important part of the national economy. However, non-white CEOs still face huge hurdles in getting into the startup game. Some studies have shown that 16% of non-white entrepreneurs experience a negative impact on their overall profits, mainly due to a lack of access to capital.
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With barriers like this, it should come as no surprise that 77% of founders are white and the majority are male, despite the attention that diversity and inclusion initiatives are gaining in technology culture today. This white majority in technology barely represents the reality of our economy or future.
As an Asian-American woman and venture capitalist, I know this is true: Investing in startups owned by people of color unlocks innovation, uplifts disadvantaged communities, and creates long-term economic growth. Success is key to growth.
Supporting minority-owned businesses is both a social responsibility and an economic necessity. Investing in minority founders brings a number of very important benefits. The National Association of Venture Capitalists recently published a report on the promising economic position of minority-owned enterprises (MBEs), which puts forward an interesting theory; The idea is that if MBEs reached the average income generated by predominantly white businesses, it would increase US GDP by $1.37 trillion.
Minority Owned Businesses
The same report found that minority-focused funds often generate higher returns than their peers. Such economic growth, especially in the wake of a global pandemic, can be an economic game changer. The problem is not a lack of success on the part of POC entrepreneurs, but rather a lack of commitment on the part of investors to seek diversity in their pool of investment candidates. Without access to capital, even the most innovative companies will not be able to scale.
Another reason for investors to seriously invest in POC entrepreneurs is the simple fact that diversification improves:
McKinsey found that ethnically and culturally diverse companies are 36% more likely to be profitable compared to peers with low diversity. What can be done about the diversity problem?
Global diversification is very important right now and investors know it. A simple solution to the diversity problem demanded by many POC entrepreneurs and the widespread outcry generated by the community today: We need more people at the table who are like us. Investors should focus their attention and money on the ethnically diverse, gender-representative and culturally rich society in which we live. The future of investing must be realized in the future of a strong economy and a strong sense of community. . Diversity is the key to unlocking both.
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For example, consider what is happening in the Houston area. By most accounts, the greatest visible opportunities in technology lie within the parameters of legendary cities like San Francisco, Los Angeles, and New York. But with the high cost of living and increasing opportunities in other areas, this picture of tech success is changing. Houston is by some reports the most diverse city in the country. It is also the next big player in innovation.
In recent years, Houston has introduced a series of detailed plans to foster innovation and create a home for a startup culture. The plans include attracting investors with a powerful new innovation district, rail system proposals and other incentives, and have attracted interest from some notable companies; Amazon opened a new tech center in the city last year.
The city’s diverse makeup and push for an expanding technology hub reflect a larger cultural movement to open doors to opportunities in technology for a larger pool of businesses; Accelerators such as Houston Exponential, DivInc and others are driving the growth of the city’s startup culture with diversity at its core. It is no coincidence that the most diverse city in the country is also one of the most competitive stars in investment capital.
Houston is just one specific example, but the VC culture as a whole could benefit from a similar commitment to diversity. Minority-owned businesses enrich communities and foster innovation by bridging socio-economic divides between ethnic and gender identities. They provide opportunities for local communities and open the door for other businesses to take root. Investing in businesses owned by people of color ultimately keeps money cyclically invested in diverse communities and can create a cycle that expands and benefits the economy as a whole.
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For investors, this means a shared commitment to pursue these opportunities. While the data speaks volumes about the wisdom of investing in startups owned by non-white entrepreneurs, venture capital firms must overcome the hurdle of convincing investors to back them.
Organizations like the Minority Business Development Agency exist to help find these opportunities. Other specialized organizations such as the Black Business Association, Code 2040, the Hispanic National Business Group, and the Association of Women Founders can help entrepreneurs target specific communities for investment. It is up to investors to acknowledge the pervasive biases in accessing capital and to hold lenders, banks, boards of directors – and themselves – accountable.
The benefits of boosting startups owned by people of color are clear. To address the pervasive systemic biases that prevent minority entrepreneurs from pursuing the same opportunities as their white counterparts, venture capitalists must lead by example.
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Fortunately, there is help for entrepreneurs looking for financing to grow their business. Nonprofits, corporations, and government agencies offer resources designed specifically for groups that have historically had few opportunities. Read on to learn how to find and apply for funding opportunities and other types of resources to grow your business.
How To Get Certified As A Minority Owned Business
There are many different types of resources available to minority-owned small businesses — you just need to put in some effort to find them.
If you’re just starting out, one of the most common small business resources is organizations that provide business planning and guidance. These types of grants can help you create a business plan, connect you with business mentors who can provide advice on starting your business, and conduct financial projections.
Does your company have a product or service that can scale nationally or internationally? If so, you may want to sign up for business and startup competitions, where you present your unique ideas and defend your business idea. Often such competitions come with cash prizes, a range of potential investors and opportunities to participate
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