In 2019, entrepreneur Renee King was at a conference for Black entrepreneurs when she heard something that took her aback: “If you can’t raise a friends and family round, what does that say about you?”
An angel investor (someone who invests their own money into a new company) directed this remark at King and about 100 other Black women entrepreneurs. The investor was also a Black woman.
For King, this comment ignores the unique hurdles Black business owners might face. While a friends and family round is one of the most common ways to raise money for a startup, it’s not always the most feasible option for Black founders, she explains.
She points to the fact that the typical Black family has $2,000 or less in liquid savings, while the typical white family has more than four times that amount. “Just imagine how challenging that is for a [Black] entrepreneur to now go to their family and say ‘Hey, I have this business and I need to raise this friends and family capital.'”
In King’s experience with Black entrepreneurs, she’s found it’s harder for Black founders to ask for help because she says they’re used to being self-sufficient.
“Our lived experiences [as Black people] have required us to make something out of nothing,” she says.
This extends beyond monetary support. For example, she feels Black entrepreneurs may not feel comfortable asking a friend to look over their business plan.
And this is nothing to say about venture capitalists, a group who invests in startups and small businesses. One percent of startup founders backed by venture capitalists are Black, according to RateMyInvestor, a venture capitalist review startup that analyzed the names, photos, and third-party demographic data of 10,000 founders to get that figure.
After her interaction with the angel investor, King’s wheels started turning. She wanted to create a solution to help Black founders access the capital and moral support they needed. She came up with fundBLACKFounders, a crowdfunding platform designed for Black entrepreneurs.
Anyone can donate money to fundBLACKFounders projects on its website. Because it focuses on Black-owned businesses, the funding helps fill in the racial wealth gap Black entrepreneurs often face when trying to raise capital for their business ventures. The platform also aims to match up to $25,000 for eligible entrepreneurs, with money from partnerships with brands and companies. While fundBLACKFounders is open to non-Black entrepreneurs too, it focuses on providing resources to help Black entrepreneurs overcome the obstacles they may face. Currently, there are no non-Black entrepreneurs with campaigns on the website.
The platform also has a flexible funding model, which means entrepreneurs don’t need to raise 100 percent of their goal to receive funds. King thinks this flexibility benefits new entrepreneurs. Meanwhile, popular crowdfunding platform Kickstarter requires that projects meet their goals before releasing the money so that creators meet funders’ expectations.
King and her team also provides businesses on her website culturally relevant coaching around the typical obstacles Black entrepreneurs run into. For example, they teach Black founders how to overcome the self-sufficiency mindset by emphasizing the need to reach out to others so their business can succeed and helping them brainstorm who should be in that network.
The platform officially launched in January 2020 and, through it, over 2,030 people have donated $258,000 in capital for 19 Black-owned business ventures. King looks at five metrics when it comes to success and impact of her entrepreneurs’ businesses. They include becoming a full-time entrepreneur, hiring the first employee, if the business can generate large returns on investments, or has the potential to qualify for business loans, if the founder receives match funding via fundBLACKfounders’ platform, and whether the founder shifts to a new strategy when their current one…
Read More: How to fund your business as a Black entrepreneur