While creating a diverse ecosystem that supports diverse entrepreneurs is emerging as an important economic development strategy, many communities struggle with how to create an environment that truly fosters inclusivity.
Minority business ownership has indeed grown over the past decade, and minorities now own roughly 30 percent of American businesses, employing more than seven million Americans and generating $1 trillion in revenues annually. But investment in these businesses remains limited. According to the Access to Capital report, “Diverse and women business owners are much more likely than their white male counterparts to cite access to capital as an obstacle to their growth. This diversity gap in entrepreneurship ultimately costs the United States billions of dollars in lost business opportunities and millions of jobs.”
Overcoming this investment gap and creating inclusive access to entrepreneurial resources is critical to expanding the U.S. economy and supporting your own community’s economic vitality. But what’s the best way to build an inclusive, supportive resource ecosystem?
Educate investors
Everyone has biases, including those who invest in businesses. Your resources may not even be aware of their biases, which is why education to overcome both explicit and implicit biases is so important to the creation of an inclusive, supportive resource ecosystem. Lesa Mitchell of TechStar offers these tips to identify and overcome bias in investing:
- Help entrepreneurs engage with investors by facilitating access to data that helps entrepreneurs paint a picture of the need they’re meeting, even when speaking with someone outside their target audience.
- Encourage investors to develop quantitative criteria for evaluating the scalability of a concept rather than relying on their gut or intuition, which can be clouded by bias.
- Bridge the understanding gap through a third party who can help entrepreneurs answer the question, “What are your investors not going to understand because they don’t have the same lived experience as you do?”
Helping entrepreneurs educate investors about needs and life experiences outside their own understanding increases the chances investors will fund businesses that fill the needs of those outside their own communities.
Stand with minority entrepreneurs
“Ally” is an oft-used term to describe those who support minority or marginalized groups. However, being an ally to minority entrepreneurs isn’t enough. To truly move the needle on investment in minority-owned businesses, we need to be “co-conspirators” and “accomplices.” The Black Women in Tech Panel Discussion during Global Entrepreneurship Week KC discussed what it means to stand with minority entrepreneurs and offered these suggestions:
- Go beyond just making an introduction to remaining involved in the process. Make an effort to create big brother/big sister-type mentorship relationships pairing experienced entrepreneurs and those with less experience.
- Push other members of your ecosystem to facilitate productive conversations, use their privilege to call out bias and walk with entrepreneurs to tackle roadblocks.
- Celebrate the successes of underrepresented entrepreneurs by using your voice to call attention to them.
When we stand together with minority entrepreneurs and become invested in their success, the entire entrepreneurial community benefits.
Encourage openness
Too often the inner workings of an entrepreneurial ecosystem can feel like a closed loop to those just starting out, especially if you’re already part of an underrepresented minority. Take a look at how your ecosystem operates and identify how to make it a more open network. The Black Women in Tech panel encourages considering these things:
- Reach out to minority entrepreneurs through members of your ecosystem as well as through larger educational or networking opportunities.
- Work to develop relationships with community organizations who aren’t directly in your resource ecosystem to create visibility and obvious entry points for entrepreneurs that aren’t yet connected to the ecosystem.
- Implement a tool like The Resource Navigator® to connect entrepreneurs with needed resources.
Creating plenty of opportunity for minority entrepreneurs to enter your network encourages diversity and improves the experience for everyone.
Listen
When we see a problem, our tendency can be to rush in and try to solve it, but without thoughtful consultation with the stakeholders, it may not be the right solution. The Black Women in Tech panel reminds us the only way to fully understand how to improve investment in minority-owned businesses is to listen to the minority business owners. Listening can take several forms:
- Understand that the people who best know the needs of minority entrepreneurs are minority entrepreneurs.
- Provide a platform for minority voices to be heard and a space for ongoing conversation.
- Be prepared to hear some difficult things, and be willing to live with that tension while gaining an understanding of what our ecosystems can do to fill the needs of minority entrepreneurs.
By listening to those closest to the issues, we can work together to find the best solutions.
Seek out help
Building an inclusive entrepreneurial community doesn’t happen overnight. It takes time and a commitment to standing with and listening to minority entrepreneurs.
SourceLink is here to help you build an effective and inclusive entrepreneurial ecosystem. Contact us at [email protected] to learn more, and check back here for more information as we continue the conversation around diversity and inclusion.
