Stacey Abrams on two major barriers for diverse founders
Every year critics decry the lack of Black executives atop companies on the Fortune 500 list. As of now, only four Black CEOs lead companies on the list, two of whom are women.
But less attention gets paid to the dearth of non-white leaders at the tens of millions of small businesses nationwide.
Georgia gubernatorial candidate Stacey Abrams, a prominent Democrat and entrepreneur, in a new interview detailed the barriers that prevent women and people of color from launching and sustaining successful companies.
Diverse founders often lack access to capital and enjoy less leeway than white male counterparts when their ventures struggle, said Abrams, who is Black.
Roughly 18% of small businesses are minority-owned and 20% are run by women, according to a study released last year by the U.S. Census Bureau that analyzed survey data collected in 2018.
At the outset of a business, diverse founders face the impediment of finding financial support. Black and Latinx women received just 0.64% of total venture capital investment between 2018 and 2019, according to a study conducted by advocacy group ProjectDiane that was first reported by Fortune.
"Very few actually know where to go to get the money," Abrams says. "And if you know where to go, you don't necessarily know the code word to get inside."
Abrams spoke to Yahoo Finance on Tuesday alongside her business partner, Lara Hodgson, with whom she has launched three companies. Their latest venture, Now Account, aims to streamline the invoice payment system used by small businesses. Last June, the company announced that it had raised $9.5 million in series A funding.
Abrams and Hodgson released a book on Tuesday entitled, "Level Up: Rise Above the Hidden Forces Holding Your Business Back."
In addition to difficulties finding capital, diverse founders must live up to higher expectations than other entrepreneurs, Abrams said.
"If you are a man, if you're a white guy, you can fail several times, and come back and say, let me try again," she said.
"But if you're a woman, if you're a person of color, and if you're a woman of color, you get basically one strike and you're out," she adds.
"There has to be a level-setting of expectations," she says. "Small businesses make mistakes, they stumble, they do not succeed."
Speaking to Yahoo Finance, Abrams recounted her firsthand experience of vying with high expectations.
"Lara and I had a business that succeeded and then we let it go out of business, a business that failed because we couldn't grow it, and then a third business that is doing exceptionally well," Abrams says.
"But under the rubric that currently exists, after our second failure, we would be out of jobs, we would have to change the expectations, and right-size them," she adds.
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