P&G Ventures and Transparent Collective highlight the challenges facing minority entrepreneurs

P&G Ventures and Transparent Collective highlight the challenges facing minority entrepreneurs ...

Today, Transparent Collective published a report exposing the shortcomings that minority entrepreneurs face, as well as suggestions for solutions.

People of color (POC) in a survey raised 48% less money than white male founders. However, considering the larger series A rounds in white male hands, it is understandable that there are some outliers with higher revenues on average. However, considering the smaller population of POC who have been funded, and the revenue performance between $250,000 and $10 million, there is a strong belief that POC are likely to significantly exceed the standard funding amount received today.

The findings also show that statistically, women and the POC who may raise at least a pre-seed round of funding are equally likely to perform well than their white male counterparts.

Founders who receive the least venture capital on the open market, when given working capital, are equally likely to produce returns. In our survey, women founders in particular, who receive 32% less funding on average, can still perform despite this obstacle.

A grant from Procter & Gamble Ventures, the venture capital firm, enabled the report. Transparent Collective is a non-profit that focuses on increasing the number of minority founders who are raising early-stage funding.

The report is dubbed R.O.I.: Reimagining Opportunity in Investing. It examines the inequitable systems that limit opportunities and innovation. It examines the systemic issues that stand behind underserved entrepreneurs, including female, Black, and Latinx getting the funding they need to develop their startup business.

Conducted in collaboration with research firm Pilot.ly, draws from over 500 interviews with founders and investors, hoping to not only better understand the unique issues faced by underserved entrepreneurs but also provide practical guidance to mitigate these obstacles.

According to Crunchbase, minority founders received just 2% of venture capital in 2021. According to Black women, 2% of venture capital was allocated to black women.

Despite this lack of access, a key finding from the study is that women and entrepreneurs of color who can achieve at least a pre-seed round of funding are likely to outperform their white male counterparts.

In a statement, James Norman, the CEO of Pilot.ly and the CEO of Transparent Collective, said that his findings were helpful in establishing a set of recommendations that would help investors connect with a broad set of entrepreneurs and opportunities. I hope this report helps venture close the capital gap.

Women, and entrepreneurs of color, are encouraged to build companies that prioritize the needs of their communities. Common-based businesses are generally less likely to be able to scale and, therefore, provide the benefits traditionally sought after by investors.The challenge for minority founders is how to define the benefits of investing in this type of business.

Among other findings, networkworking and equitable networking spaces equitiesposed as a key challenge for underfunded entrepreneurs. In other words, minority founders rely on crowdfunding, which is generally insufficient and inefficient in its ability to raise substantial capital.

Many minority entrepreneurs and funders continue to connect at happy hours while while participating in traditionally exclusive golf and tennis clubs. This spatial disconnect means many minority entrepreneurs and funders just arent finding one another.

Recommendations for minority founders

According to a study, minority entrepreneurs should consider reframing the business''s profitability and scalability rather than focusing solely on the outcome and potential impact on the community. Balancing the personal passion points with growth opportunities will assist investors understand the financial gain opportunities.

Minority entrepreneurs should also leverage the power of personal accountability and community engagement. Founders who build businesses that benefit more than just the bottom-line present less of a flight danger for investors.

Recommendations for investors

According to the study, investors should seek to create safe and equitable spaces to connect with underserved entrepreneurs they might not be meeting in their current networking circles.

De plus, they should hire diverse investors who can understand and convey the potential consequences of minority-founded businesses.

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