Latinx and Black entrepreneurs create a significant proportion of new businesses. but, … [+]
Serial entrepreneur turned investor Felecia Hatcher is used to building in the midst of uncertainty. She recalls when she started a gourmet popsicle and ice cream catering company with her husband in 2008 in the midst of the economic recession.
“If I had known that we were in the middle of an economic recession, which is probably one of the worst times to start a business, I probably wouldn’t have started it,” she says. “But it has also created many unique opportunities. A glimmer of hope exists only when the economy is uncertain.”
Hatcher is currently the CEO of Pharrell Williams’ organization Black Ambition, which invests in high-growth startups founded by Black and Hispanic entrepreneurs. All the while, underrated entrepreneurs continue to thrive. Since 2020, new business from Black-owned businesses has increased by 14%. According to the Census Bureau, Latino businesses accounted for 36% of new businesses in 2023.
“We make up almost 20% of the population and have $3.2 trillion in purchasing power,” Rocio van Nierop, co-founder and CEO of Latinas in Tech, says of the Latinx population. “It’s time to flip the script and take control of our power.”
But in a widespread ecosystem of unfulfilled promises in the name of DEI, coupled with economic risks in 2024, undervalued founders are set to ignore for the rest of the year. face an unprecedented level of uncertainty.
In response to the 2020 killing of George Floyd and pressure on Wall Street, the 50 largest publicly traded companies in the U.S. have committed nearly $50 billion to addressing racial inequality, according to the Washington Post. . A McKinsey report cites racial equity efforts to reach $340 billion by fall 2022. But an analysis released 14 months after George Floyd’s killing found that 37 of the 50 largest companies had committed just $1.7 billion.
Felecia is the CEO of Pharrell William’s Black Ambition Opportunity Fund.
“A lot of entrepreneurs were put on this very high cliff. [in 2020]. There was a huge injection of money and opportunity, and now in many ways those things are quietly disappearing,” Hatcher says.
The rejection of affirmative action has opened the door for efforts to serve underrepresented communities to be called into question across foundations, programs, and companies.
Among those challenging DEI are conservative groups like the American Equal Rights Alliance, which sued the Fearless Fund over $20,000 small business grants to black women.
“We missed out on a potential investment of more than eight figures that could have been realized before the lawsuit,” Fearless Fund CEO Ariane Simone said in a February interview with CBS News. “Right now, we’re looking for people who believe in DEI and believe in funding programs like this. We’re looking for companies that are willing to be proactive.”
Another group, America First Legal, has filed a lawsuit against business platform Hello Alice, alleging its subsidy program for black-owned small businesses is discriminatory.
“We’re not changing anything. If we change ahead of time, they’ll win,” Hatcher says of his work with Black Ambition. “We are very specific and intentional about who we serve, and nothing will change at this time. I implore all of my colleagues to hold the line and not change anything. To do.”
Despite a new generation emerging in the business world, underrepresented founders continue to face challenges in accessing capital to grow. When it comes to loans, white business owners are more likely to be fully approved for a loan, compared to 38% for Hispanic individuals and 20% for black business owners, according to Bankrate. Access to investment appears to be similarly difficult. In 2023, black founders received only 0.48% of venture funding. Latinos receive less than 2 percent of this pie.
“The numbers show significant growth in entrepreneurship in diverse communities,” Hatcher said. “The problem is no longer that we’re not starting a business. The problem is that we’re experiencing a lot of interruptions as we grow our business.”
What does a founder need? In addition to unlocking a huge amount of access to capital, Hatcher contributes authentic mentorship, representation within companies, and a healthy relationship with money. .
Over the past three years, Black Ambition has invested in more than 100 Black and Hispanic-owned companies, raising more than $95 million.
“These companies have been overlooked, but look at the results of a $10 million investment. The return is almost 10x,” Hatcher said. “Would you like to be part of that growth and share in its success?”
