Despite the Achievement, Funding Remains the Key Barrier for Black Women Entrepreneurs in Canada
3 min read · Dec 2024
Women Entrepreneurship Knowledge Hub, Black Business and Professional Association, Casa Foundation, and de Sedulous Women Leaders (2021)
Black women entrepreneurs face difficulties in accessing start-up capital and tend to use unconventional funding sources to finance their businesses.
Summary
This is a summary of “Rise Up: A Study of 700 Black Women Entrepreneurs” by Women Entrepreneurship Knowledge Hub, Black Business and Professional Association, Casa Foundation, and de Sedulous Women Leaders (2021). This study offers a comprehensive analysis of Black women entrepreneurs in Canada, addressing significant gaps in previous research, which has often been limited by small sample sizes, a focus on immigrant women, or reliance on qualitative methods. Based on the experience of 700 Black women entrepreneurs across Canada, the study highlights the unique demographics, business characteristics, motivations, challenges, and achievements. Despite their achievements, funding remains a critical barrier, with over 80% relying on personal financing.
Method
This mixed-methods study examines the experiences of 700 Black women entrepreneurs who applied to the Rise Up Pitch Competition. Descriptive statistical analysis captures their demographic and business profiles, as well as the barriers they faced when starting or growing their businesses. Qualitative data from open-ended questions provide insights into participants’ motivations and achievements. Comparative analysis against broader population data further contextualizes the unique characteristics of Black women entrepreneurs.
Key Findings
Black women entrepreneurs in this study are well-educated, culturally diverse, and deeply rooted in Canada.
62.7% of Black women entrepreneurs hold a bachelor's degree or higher, more than double the rate of Black women overall in Canada (27.5%).
Nearly equal proportions identify as African (44.7 %) or Afro-Caribbean (44.3 %).
Most Black women entrepreneurs have long-term ties with Canada, with 39.7% born in the country and 37.1 % having lived in Canada for over a decade.
Black women-owned businesses are small, newly established, online, and home-based.
The majority operate on a small scale, with 74.8% having no full-time employees, 69.4% having no part-time employees, and 63.1% having no casual or temporary employees.
Approximately 93% of these businesses had annual revenues under $100,000.
Over half of the businesses were established within the past two years.
Nearly 80% operate online, and many are run from home.
Black women entrepreneurs are driven by various factors, including market opportunities, desire for flexibility and family/community influences.
88% of Black women entrepreneurs were motivated by the recognition of market opportunities for their products or services, with 66% attributed their entrepreneurial journey to unexpected chances.
73% of entrepreneurs cite flexibility and autonomy as key drivers for entrepreneurship.
Many Black women entrepreneurs were inspired by their family members who were also entrepreneurs.
Access to capital and support networks are the main barriers Black women entrepreneurs face.
78.5% of entrepreneurs reported difficulty accessing financial capital, leading 81.4% of them to rely on personal financing as their primary source of funding.
While most entrepreneurs benefit from strong family support and community connections, a quarter of them expressed uncertainty about available business support.
Takeaways
Black women entrepreneurs face significant barriers in securing the capital necessary to grow their businesses. The limited capital flow to both Black communities and women-owned enterprises creates a double barrier. This lack of financial support likely contributes to the prevalence of small businesses within this group. To address these barriers, targeted support is crucial, including ensuring access to various financial resources and providing education on effectively navigating and utilizing different capital products.
In addition, it is important to recognize that Black women entrepreneurs are a diverse group with unique needs and lived experiences. Acknowledging the intersection of race, gender, and other factors is crucial for creating a supportive entrepreneurial ecosystem. Tailored programs designed to meet the specific challenges and aspirations of different subgroups of Black women are essential to unlock their full potential.
References
Black Business and Professional Association, Casa Foundation, de Sedulous Women Leaders, and Women Entrepreneurship Knowledge Hub. 2021. “Rise up: A study of 700 Black women entrepreneurs.” Women Entrepreneurship Knowledge Hub.
About WIN-VC Canada:
New Power Labs is the research lead of the Women and Nonbinary (W) Impact (I) Network (N) for Venture Capital (VC), a national collaborative of organizations working to provide services, programming, events, and dedicated resources to women and non-binary entrepreneurs and gender lens investors across Canada who are working towards becoming investment ready and increasing the pool of investors driven to invest in these ventures.
This research is part of WIN-VC Canada, supported by the Government of Canada. WIN-VC acknowledges the support of Innovation, Science and Economic Development (ISED). ISED has awarded funding for WIN-VC that will make the venture capital environment more inclusive for women by transforming traditional investment processes, processes and knowledge into respectful and meaningful approaches that value equity and impact with a focus on diverse women and non-binary entrepreneurs and SMEs including Black communities, Indigenous peoples, racialized populations, persons with a disability, 2SLGBTQ2+ and new Canadians.
