Unfortunately, according to a new report published by Pitch Better Canada called FoundHers, Black women entrepreneurs get the short end of the stick in Canada; they remain under-represented when it comes to acquiring funds and connecting with investors. The report released June 23, 2021, surveyed over 1500 founders across Canada and captured thousands of data points on the situation for Black Canadian businesswomen.
"Although competent and capable of building viable businesses, Black women often lack access to networks, mentorship, and exposure to those with the resources and capital. This has negative repercussions,” explains Adeela Carter, co-founder and Director of Marketing Communications at Pitch Better Canada, who notes that most Black women entrepreneurs look for support from within their community through online channels like Facebook groups. These groups are often used as alternative support systems by female founders where one entrepreneur may find success in her business and return to the Facebook group to share insights and tips with other members. However, it's not common for members from other communities to send help.
“The research is an important first step in identifying structural problems faced by Black women-led organizations,” says Amoye Henry, co-founder and Director of Research at Pitch Better Canada. “This study will help the Government of Canada and financial institutions better understand the Black women entrepreneurship ecosystem and allows for increased capacity-building and advisory services for Black women, gender-diverse entrepreneurs, and Black-serving social purpose organizations in all stages of development.”
The report also reveals that, although Black women founders are highly educated and their businesses are expanding in sectors beyond traditional boundaries, their experiences with funding, particularly through participation in incubation programs, stand in stark contrast to that profile. The report recommends that the government work in partnership with Black women-led startups to reduce systemic barriers and allow more Black women into decision-making positions.
“Much progress has been made in acknowledging the barriers facing Black women founders and now it’s time to dismantle them by making room for broader and more diverse representation,” says Henry.
Pitch Better Inc. collaborated with the Canadian Women's Foundation, the Investment Readiness Program with the Government of Canada, the Business Development Bank of Canada (BDC), and Brock University in preparing the report.
Pitch Better Canada
Established in 2019, Pitch Better Canada is the result of a dynamic collaboration between business strategist Amoye Henry, and marketing guru, Adeela Carter. Pitch Better Canada is a market research and capacity-building firm that works to bridge the gap between women-led start-ups and access to capital in the form of grants and investments. To date, Pitch Better Canada has supported over 700 Canadian businesses and curated three programs targeting female founders:
1) Secure the Bag Workshop (Vancouver and Toronto), to help female small business owners receive training to expand their business
2) InvestHER Summit, a virtual experience that connects investors with Canadian businesses
3) FoundHers, their most recent accomplishment
According to Carter, Pitch Better Canada has always been committed to supporting diverse founders. The idea for FoundHers was the next obvious step in their program.
“Lack of data often left us with many unanswered questions and that affected our ability to produce results. In addition, we recognized the significant lack of Black founders’ start-ups in Canadian incubators/accelerators or other local innovation ecosystem events,” explains Carter.
Led by Carter and Henry, the study aims to:
1) Identify the size and scope of businesses led by and serving Black women;
2) Provide a clear picture of the barriers faced by Black women-owned businesses and organizations in Canada;
3) Discover and design the personas that accurately reflect a large share of the Black women-owned businesses, including their challenges;
4) Identify needs of Black women entrepreneurs with new products and services offered by the supply side of the market; and
5) Understand the perceptions of financial institutions within Black women-owned businesses.
The study took roughly two years to conduct using a mixed-method approach (quantitative survey and qualitative group study) for data collection and analysis, with the qualitative research portion based on a sample of 126 participants. The survey was open to all Canadians but disqualified anyone who responded “no” to questions included as part of the inclusion criteria, including gender, race, and age. That is to say, only Black or biracial women aged 18 years or over were eligible to participate in the survey.
There are four versions of the survey – one targeting founders in the for-profit space, another focusing on founders in the not-for-profit space, both in English and French. All versions of the survey included 45 to 46 questions.
The study can be summarized as four points:
1) Black women founders in both the for-profit and not-for-profit sectors lack access to capital.
2) Although Black women have advanced qualifications (the study found that almost 60% of Black women entrepreneurs have a bachelor's degree or higher), they still lack the financial resources required for growth and sustainability. As a result, most Black female entrepreneurs are often the only employees in their organization.
3) 56% of Black women business owners identified as mothers. The familial constraint of motherhood is recognized as a barrier by some women. They don't have the time needed to focus on their craft due to their responsibilities as mothers. Additionally, even if time is not a constraint, they are held back by their commitment to jobs to get a guaranteed paycheque.
4) The impact of COVID-19 continues to be a challenge. The past year has forced a large number of business owners to pivot their organization's practices to survive the pandemic. With Black women business owners already being at a disadvantage, this forced transition is expanding the equity gap. It was reported that 41% of respondents indicated the COVID-19 pandemic decreased their profits, while 11% of respondents indicated that they experienced an increase in revenue, and 18% of respondents noted that the pandemic had no impact on their revenue or profits.
Emphasizing some of the findings that she believes are important, Henry says, “The systemic barriers are rampant throughout their findings and are ultimately a micro-based reflection of what’s happening in the greater business ecosystem.”
The respondents also indicated that they were open to investment opportunities, but didn't know how to get in front of investors who would take them seriously. Some respondents were not willing to give up equity or control of their business in exchange for capital. Some acknowledged that the easiest way to scale operations and create companies that provide jobs is through external financing and yet, many didn’t feel like their home financial institutions would support them.
The other point is that the Black Entrepreneurship Program facilitated by the Government seems to be a step in the right direction. However, Henry contends that many respondents felt a lot of apprehension and anxiety around the application process and potentially being asked to provide things that they didn’t have. “It is a vicious and scary cycle,” admits Henry.
While some of the observations are consistent with other studies that have come to similar conclusions, Henry argues that the FoundHers report provides new data and insights that give a detailed understanding in a Canadian setting.
“The report found that for many founders, the pursuit of their passion was the second motivation for starting a business, while the first motivation was being ready to be their own boss.”
The study also puts forth several recommendations.
1) The Government of Canada should support and fund the creation of a Black Women’s Eco-System Knowledge Institute led by and for Black women.
2) The government should also conduct an audit of existing federally-funded national entrepreneurship knowledge-sharing programs such as the Women's Entrepreneurship Knowledge Hub in key areas such as diversity, equity, inclusion, and access.
3) Government-administered grants and other funding agencies should update policies to include more Black entrepreneurs.
4) Government must create an inclusive environment with transparent practices for information and opportunity sharing with more targeted incentives.
5) Incubators and accelerators must create targeted information channels along with long-term and short-term networking and access opportunities for Black women.
6) Service providers should enhance and maintain access to technology, human development, and training. There must be a targeted approach to developing awareness so that Black entrepreneurs can access skill diversification opportunities.
Elucidating on how the research is meaningful for Black women entrepreneurs and non-profit founders, Henry thinks Black women entrepreneurs will be more open to broader visions that look beyond short-term outcomes and actively seek out mentors with diverse backgrounds, skill sets, and lived experiences, to enhance their networking circle and access to better opportunities. She stresses that, although the findings of the report are substantial, they only represent the tip of the iceberg in terms of the socio-economic issues facing Black women entrepreneurs.
“We will conduct further research that will revisit this data for a more in-depth analysis of the socio-economic dimensions captured in this report,” she promised.
FoundHers Interactive Dashboard
The team at Pitch Better Canada also launched a FoundHers interactive dashboard. Explaining the purpose behind the dashboard, Carter says, “The FoundHers Interactive Dashboard is a game-changer. It helps solve long-standing problems in the investment ecosystem and access to financial and community networks.”
Featuring over 1000 Black women-owned businesses and non-profit organizations across Canada, the dashboard serves as a foundation for a sustainable networking and knowledge-sharing hub.
“The FoundHers dashboard will provide a place for investors and venture capital institutions to form investment partnerships with businesses on the platform,” says Carter before adding, “It provides a simple, convenient way to search and connect with Black women-led businesses within a specific industry or region that are actively looking to raise capital, all on one platform.”
They hope that through research, access to education, community building, and enabling more stakeholders to interact with the small business community, Carter and Henry can have an impact on the ecosystem for Black women founders in Canada.
For more information on FoundHers, head to www.foundhers.ca to study the report.