My life can be split into two halves, each fulfilling an American dream. The first half I spent on the American dream that was engrained from birth: Pull yourself up by your bootstraps. The second, current half of my life revolves around an American dream that has arisen from our technocratic society: Start your own business.
Every statistic on the subject of entrepreneurship says that I am likely to fail on the second American dream. This is because as a woman of color, my ability to secure funding is severely hindered by the startup system.
By all accounts, I grew up in a solidly middle-class family. I always had food on the table, I never had to worry about being homeless and I was able to occasionally indulge on a luxury item. I also came from a household that emphasized finding a life of basic comforts — no more, no less. My mother and stepfather paid for their house doing jobs that did not require a higher education, any embedded level of risk taking or forward thinking.
For their generation, and every generation they had known before, that mentality worked. In a sense, I suppose I was the first generation in my family that held a less conventional set of life goals.
I went to high school in a competitive IB program and knew from a young age that I wanted to go to college. Coming from the home culture that I did, my family did not have the means to invest entirely in my education. If I wanted a degree, I would have to put myself through school. And so I did. During all four years while earning my Bachelors degree at Virginia Tech, I worked 30+ hours a week as a campus coffee shop manager.
Fortunately, I was able to balance my tough major and demanding work schedule. Rare as it was for graduates of Virginia Tech, I landed a job in New York City straight out of school, where I worked full-time in IT accounting and finance for six years. As I walked through the doors of Ernst & Young my first day of work, I felt myself become the embodiment of the “pull yourself up by your bootstraps” American dream.
While I was working in finance and IT, I lived in Harlem for a few years and engaged in the community as a volunteer teacher. My time there contrasted with my childhood, during which I was fortunate to always have access to good food. I saw that a household lack of quality food has far-reaching effects, and I wanted to do something to make the situation better for my neighbors. I started with small solutions, like petitioning for a community garden.
When my efforts failed to make any meaningful change, I thought about another approach. I knew I had the potential to head a successful company. So, I took a huge risk and quit my job to start Re-Nuble, which is a startup aiming to disrupt the food system and bring more affordable organic produce to everyone. Thus I started on the second American dream — start your own business.
Being an entrepreneur and the founder of a startup is extremely risky.
To launch my company, I followed the same funding path as most startups; I was the first investor. I put $30,000 of my own money into the company, which was enough to explore a first business model and land additional early round funding. Also, like most startups, the initial funding I secured was not enough to keep the company running until I was ready to solicit another round. My family could not afford to invest in my company; thus, I had no choice but to pick up a full-time job to keep operations going.
Fortunately my hard work paid off, and I landed additional capital. While I managed that money to the best of my very capable abilities, the unique challenges facing Re-Nuble entail a relatively higher overhead than a traditional digital tech startup. With each round of funding, my options increasingly pointed to non-traditional investors that are difficult to source and are limited by their willingness to invest in the necessary capital expenditures.
Here’s the thing about the world of startups that no one tells anyone on the outside — my situation is perfectly normal. According to Statistic Brain, 50 percent of all startups will fail by their fourth year. The problem is that for minority-owned startups, the rate of success is much worse. For all of the accolades and for all of the sexiness associated with forming the newest and most innovative company, being an entrepreneur and the founder of a startup is extremely risky, especially for minority-owned businesses.
Understanding why that’s the case is clear enough looking at my own life story. Most successful startups are founded by people from wealthy families. I do not come from a family that can give me money — or even co-sign for a loan, without putting their entire life at risk.
While Mitt Romney and venture capitalists speak of “small” seed investments in the range of $20,000-$50,000, the reality is that that amount of money is enormous to many families. The reality is that a disproportionate number of minority families do not come from environments in which taking risk and investing for possible future returns is a viable move.
To complicate the situation further, finding additional investors requires significantly more time for me than for most startup founders. Every study ever conducted on the issue demonstrates that being both a female and of color, I have to work harder to get even a fraction of the return as my white male counterparts — who make up the majority of the startup landscape — whether it’s in terms of interested investors or income levels.
I am here to do my job, which is to grow Re-Nuble into a strong, fair and innovative company. After countless pitch meetings, conversations with investors and networking events, I can’t help but notice that nearly all of my potential investors or colleagues are white males. Some of these potential investors immediately assume that my interest in the startup scene is as a company marketer and not as a founder of a company.
I often wonder if that is feedback based in bias. Though my priority is to build my company, the idea of being one of the few women of color entrepreneurs becomes a de facto part of my identity.
We need to understand that not all founders are created equal.
Though there are other options to raise capital, none compare to the impact of traditional investors. Crowdsourcing, though great for marketing, is seldom enough to raise anything significant. Likewise, grants available to for-profit businesses are rare, and finding them and applying are a full-time job in and of itself.
Over time, a systematic lack of funds creates a bottleneck effect, as I cannot invest in something until I am sure of its return, and must evaluate everything in hindsight. Indeed, the number-one reason cited for an early stage startup to fail is lack of funds, making my limited access to investment opportunities a truly detrimental blow to my company.
I’m a solutions-driven person, though even I admit that the remedy is something much harder than a one-click call to action. Yes, we need more funds dedicated to minorities, especially women. Yes, we need to make education more affordable. Yes, we need to match capital raised, teach financial literacy and support one another. Beyond that, however, we need to change how we understand the startup landscape.
We need to understand that a successful minority-owned business is the exception, not the norm. We need to understand that not all founders are created equal, and minorities — especially women — face more scrutiny as entrepreneurs than others. We need to encourage minorities to start their own businesses while we support their efforts through investment, mentorship and networks. We need to change the actual system.
There are grave imbalances that dictate failure for minority-owned businesses. Finding solutions is a formidable call to action, I know, but it’s one that is critical to the new American dream.