Since 2018, Black and Latinx women entrepreneurs have received just 0.64 per cent of venture capital investment, despite Black women representing 42 per cent of net new women-owned businesses. There is an enormous amount of untapped female entrepreneurial talent across the United States and United Kingdom, and yet very little capital is being invested.
Late in 2020, the UK government set out to address this funding gap and put out a call for bids to research how to best reduce barriers for investment in Black female entrepreneurs in both the UK and United States.
As an effort to understand what exactly the barriers are preventing equitable investment into Black female entrepreneurs and to take tangible steps towards overcoming them, the call spoke directly to experts at Palladium Impact Capital (formerly Enclude). According to Managing Director Steven van Weede, the team is deliberately pursuing opportunities to achieve racial and social equity and assist in driving more investment capital to excluded communities.
“We understand the significance of achieving racial justice by strengthening our ability to dismantle barriers to capital and opportunities for Black female entrepreneurs who are too often underserved,” he says.
“We firmly believe investments made with an intersectional lens will better include underserved communities and markets,” agrees Anastasiya Litvinova, Associate Director at Palladium Impact Capital. “We believe that Black female entrepreneurs have the unfulfilled potential to generate lasting positive change in our society, and we know their inclusion in diverse investment portfolios is an opportunity for all investors.”
Based on a three-pronged approach of data analysis, literature review, and interviews with both entrepreneurs and investors, Palladium Impact Capital won the bid and is now nearing the final phases of completing their report for the UK Foreign, Commonwealth and Development Office.
The final report will address the size of the gap in investments across the UK and US markets, build off of the extensive work that’s already being done on this key justice issue, and further the understanding of existing barriers to investment for Black female entrepreneurs. According to Palladium Impact Capital’s early findings, the mismatch between capital demand and capital supply for Black female entrepreneurs could be as large as 85 per cent (vs 78 per cent for women owned businesses overall). The report will include recommendations for actions that can be taken to reduce these inequities in capital flow.
“The project sparked a lot of internal conversations about the issue of racial equity in the investment landscape,” says Palladium Associate Jesse Opoku-Asiedu. “Our hope is that the report carries on the conversation to a bigger platform.”
The end goal is to provide solutions to improve the environment for economic growth and support UK economic resilience by encouraging sustainable and longstanding US and UK investment into Black female owned and led businesses across both markets.
“We know that investing in women is a good financial bet,” says Kelly Roberts-Robbins, Palladium Associate Director. “Women have stable companies, they grow their businesses at good rates, and are clever risk-takers. Women are smart investments, they need capital, and they deserve it as much as any business.”
With plans to jointly publish the report findings with the FCDO in March of 2021, the team is hopeful that they will continue contributing to the large body of work already researching these investment barriers and provide clear and actionable solutions for both the UK and US governments to better address the dearth of capital being invested in Black female entrepreneurs and business owners.
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