It’s difficult for Black female founders to get their foot in the door, especially when it comes to raising capital for their business. However, billionaire businessman Mark Cuban told ESSENCE that Black women shouldn’t necessarily be looking for funding. He thinks they should do something else instead.
Why should Black women stop looking for funding?
The Shark Tank investor spoke with ESSENCE at SXSW in Austin, Texas, ahead of his panel discussion on entrepreneurship with Tabitha Brown and entrepreneur Justin Fenchel. Cuban suggested that instead of searching for funding, Black female founders should find a way to use their sweat equity to build capital on their own, even if this means starting smaller and slower.
“Because there is a learning process, and it’s twofold. One is learning about your business and making it loanworthy. Then two is learning the language of those making the loans,” he said.
Lack of funding for Black women
Cuban did acknowledge the funding gap between Black women and their white peers. Black women business owners who seek funding experience three times more rejections than white business owners, as stated by Stearnsbank. Additionally, only 2% of venture capital funding in the US goes to female-only founding teams.
Even though, 55.2% of Black-female owned business make between $100,000 and $999,999 in annual sales, which is slightly higher than 54.7% of all Black-owned companies with similar figures.
It’s for this reason that Cuban says Black women should lean into their knowledge of the financial side of their business so when they’re ready for a loan they won’t be exploited.
“You have to take whatever time to get it right, because if you go into that bank, if you go somewhere to try to get a loan and you don’t get it, you still got to be in a position to work and go forward,” he explained. “What’s even worse, and this is something I think is the most important point—there’s a lot of predatory lending out there, and it’s awful. [The lenders] see people who may not have the financial literacy or understanding, and they’ll say, ‘Oh, yeah, I’ll make you a loan.”
Image: David Ryan Jones
