How to Invest in BIPOC-Owned Companies
Black women in the United States make up the majority of those starting new businesses—17 percent, compared to 15 percent of white men, according to recent research by the Harvard Business Review and the Global Entrepreneurship Monitor (GEM). Yet, only 66 percent of businesses run by Black and Indigenous people of color (BIPOC) receive a percentage of requested funds—compared to 80 percent of white business owners. And according to research by Fundera on the racial funding gap, only 29 percent of BIPOC business owners receive all the funding they request from a bank, while more than half of white-owned business get all their funding this way. BIPOC business were also disproportionately affected during the pandemic—66 percent feared permanently closing and struggled to get loans, as shown by numbers from the United States Chamber of Commerce.
BIPOC businesses face many barriers when it comes to accessing funds and financing options, and investing in BIPOC-owned and led companies can help decrease the racial funding gap.
"The vast majority of new entrepreneurs are Black women," says advisor Vonetta Young, who helps BIPOC individuals with private equity and venture capital. "So if we want to support the next generation of businesses that will last decades or more, this is exactly where we should be investing."
Here are ways you can use your dollars to invest in BIPOC companies.