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Diversity backlash is making it even harder for Black women entrepreneurs to get funding

Madeline Bennett Profile picture for user Madeline Bennett July 2, 2024
Summary:
The BOSS Network and Sage are trying to make VC funding more equitable with $1.5 million commitment

BOSS/Sage
Smith and Willis

Black female founders are one of the most disregarded groups. Women of Color get less than one percent of VC funding each year. This is even more worrying when that pot is getting smaller: by the end of 2022, Black entrepreneurs saw a 45% decrease in financing.

Against this backdrop, Sage and The BOSS Network are trying to rectify some of this imbalance. The two organizations are now in their third year of the ‘Invest in Progress’ grant program, and have just awarded 25 more Black women entrepreneurs a $10,000 grant each.  

As well as the cash, the 2024 awardees get access to a 12-month program of entrepreneurial mentorship, coaching and education, to help them start and grow their business. 

The program, which is part of a $1.5 million commitment Sage has made to the BOSS Network, has now awarded grants to 85 women over the last three years.

Loss of momentum

When diginomica first spoke to Dr Cameka Smith, founder of The BOSS Network, in 2022, she explained that the murder of George Floyd and subsequent BLM momentum was the catalyst for her to approach companies for grant funding. The time felt right, as there was so much momentum around DEI. However, in the two years since, Smith has seen things going backwards. She says:

Unfortunately, there has been a decrease in funding and support, and it's very challenging. As a founder with a fund, it has been very challenging for me to even raise additional capital. We are in a climate where DEI and affirmative action is being challenged, and many people are moving away from investing in small businesses, which is incredibly sad because there was no support from the beginning.

This has left many Black female founders feeling discouraged, coming at a time when they were just starting to feel some hope of being taken seriously as small business owners. This sense of discouragement has filtered through into the number of applications for the BOSS Impact Fund. In 2023, 18,000 women applied for one of the 25 grants available; this year, that number has fallen by a third to just 12,000. Smith adds:

That is still a lot of applications, but we can see that some people feel like - I'm applying and there's so many people I'm competing with, and there's just not enough opportunity out there, it isn't even worth my time. It's sad that instead of sticking with the initial support that we were trying to garner around George Floyd and looking at what was happening around racism and access to capital for founders of color, we decided that's not a mainstay of importance.

For that reason, Smith commends Sage, for its ongoing commitment to breaking barriers for Black female founders. She says:

It does not matter what's happening in the world. I wish other brands felt the same way.

Successes 

Success stories from previous grantees prove how vital these kinds of programs are. Nancey Harris was one of the 2022 grantees, and her eyewear business Vontélle signed a partnership deal with Disney for its children’s glasses. Since getting her grant in 2023, Jon’ll Boyd was able to get her Boyd Cru Wines stocked on the shelves at Target.

Among the first cohort of women in 2022, many went on to get additional grants from other sources. Many of the applicants would have already applied for between 10 to 20 grants, Smith says, and the BOSS funding is the first grant they have ever received. She adds:

It gave them so much momentum and excitement to feel, my business is investible. It encourages them to push forward and apply for more grants, go after more opportunities because now they have confidence in themselves.

While the $10,000 is immensely valuable to the successful applicants, equally important is the year-long program. Across the 12 months, they get access to the BOSS community of like-minded women, the support of other founders through peer-to-peer mentoring, and the ability to work directly with Sage leaders.

The potential for Black women founders to exploit the Sage network in this way was a key reason for the vendor’s involvement. Cadence Willis, VP of Sage Foundation, Sage, explains that the firm’s partnership with the Boss Network came about in response to the significant barriers Black women face when trying to start or scale a business, and the fact that US black women founders receive less than one percent of venture capital. She says: 

We felt that Sage was uniquely placed to help to address those barriers, not just through funding, but through our network, through mentorship, through skills and training programs, and through our technology. Our partnership with the BOSS Network and with Cameka was the perfect fit.

The program is having a ripple effect in the community, it’s not just the 85 grantees who are benefiting. Willis notes that the participating businesses in the first two years reported hiring a total of 65 new employees as a result of the grants, which has a significant impact on their local communities. 

Willis adds that during her recent conversations with year two graduates in Atlanta, who had completed the year-long program, while many cited the grant as incredibly important, they had gotten significantly more value through the coaching and mentorship, and being connected with like-minded entrepreneurs and experts within Sage.

To be successful, applicants have to meet a list of very strict criteria, based on the business' health, whether or not they're ready for the level of investment, and how they might use the funds.

For the thousands of women who weren't successful, going through the process can help set them up for success next time. Willis says:

I met one of the women in Atlanta recently who applied for our grants program last year and didn't get through. She said that the application process helped her to hone her business plan, to think about the sorts of questions she might be asked.

That particular applicant applied again this year, and received a grant. Willis adds:

For many of the women who have taken part in the program, they have received so much rejection - 33% of them have been denied a loan from a traditional bank, it's a very challenging environment. And for many of them, they've applied for so many grants and have had so many knock backs. That can be really hard.

You need to keep trying, keep learning. Keep making sure you're aware of what's available to you, connecting with like-minded people, asking for advice. It might not be a yes straight away, but it might be a yes next time. We hear that very much from the women who've taken part in the program, that's the approach they're taking and that's the value they're getting through these networks.

While many companies have recently cut back on DEI investments, making staff redundant and cancelling programs, Sage has no plans to follow suit. Willis maintains that the firm is not changing course on any of its business or community objectives, despite the ongoing debates around DEI in the US. She adds:

Our purpose has been to knock down barriers. We believe in levelling the playing field for everyone, not elevating one community over another. We know inclusive communities that welcome everyone, regardless of their background, are good for business and innovation. We remain committed to doing our part to help create that inclusive and innovative environment where everyone can thrive.

While Sage is now in the third and final year of this particular program with the BOSS Network, that doesn’t necessarily mean an end to the company’s involvement with Smith and the community she has built. Willis notes that the third year of the Invest in Progress scheme has only just begun, and Sage is currently focusing on taking those 25 women through the program. She adds:

We'll be reviewing the program at the end of the year. We've got a lot of learnings, we are already starting to feed that into some of our thinking around global programming. We are absolutely very supportive of the work that Cameka is doing and very proud of our partnership in the US.

In the meantime, Sage is expanding its work with other programs aimed at supporting Black women founders. Earlier this year, it announced the Pathways to Success program, offering 150 Black women entrepreneurs in Atlanta one year of training access and a three-year membership to The BOSS Network.

My take

It’s disappointing – though understandable – that fewer Black women have applied for the Invest in Progress program this year. With so many big-name companies shutting down or cutting back on their DEI teams, and the pitiful amount of VC funding going to Black founders diminishing even further, many Black women will no doubt be considering giving up their entrepreneur dreams - if they haven’t already. So well done to Sage for continuing its commitment to this neglected group. Hopefully this will encourage other tech vendors to get involved in similar programs, and VC funding will start to become more equitable.

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