The Trillion-Dollar Blind Spot
While the majority of investors perceive the funding landscape as balanced, their actual investments in multicultural and women-owned businesses are highly skewed. In our recent survey, we found by just how much.
The perception
8 of 10
Investors say...
Multicultural and women business owners get the right amount, or more, of capital they deserve to run and grow their businesses.
The Reality
Investors report capitalizing multicultural and women-owned businesses at 80% less than businesses overall.
Traditional
Women & Multicultural
blind spot noun
/blïn(d) ' ,spät/
Definition of blind spot
1 : the small circular area at the back of the retina where the optic nerve enters the eyeball and which is devoid of rods and cones and is not sensitive to light
2 : an area in which one fails to exercise judgment or discrimination
2 : an area in which one fails to exercise judgment or discrimination
WHAT'S CAUSING THIS
BLIND SPOT?
risk perception
Investors can't see over the risk wall. . .which is twice as high for multicultural and women-owned businesses.
Women & Multicultural Businesses
Traditional Businesses
Lack of Access
% of investors who say that they "very frequently" review businesses led by:
46%
Men
17%
Women
36%
Non-Minorities
18%
Minorities
Lack of familiarity
% of investors who say that sector is a compelling driver when evaluating businesses:
46%
Traditional Businesses
36%
Women-Led Businesses
33%
Minority-Led Businesses
WHAT IF WE REMOVED THE BLIND SPOT?
Multicultural and women-owned businesses could account for $6.8 trillion in gross receipts if they matched their percentage of the labor force and business revenues were equal to traditional firms.
This would represent nearly 3X the current output, with a missed opportunity of $4.4 Trillion
the way forward...
7 steps to more equitable funding
Set targets, not quotas.
Commit to finding these entrepreneurs by setting targets for how many you evaluate and the percentage of women- and multicultural-led businesses in your portfolios.
Hold yourselves accountable for measurable outcomes.
Track statistics on how many diverse companies you are seeing and how many diverse companies you’re investing in; share those stats with your Limited Partners.
Expand your reach.
Eliminate barriers by conducting proactive outreach. Hold “pitch days” specifically dedicated to women and multicultural entrepreneurs; attend conferences that they attend; leverage banking relationships to source investment opportunities.
Reconsider your screens.
Expand the criteria for evaluating opportunities. Shift your mindset from valuing entrepreneurs based on pedigree—like certain university degrees—to their hard skills, caliber of ideas, and understanding of unique markets and consumers.
Be transparent.
The process and criteria for securing an investment is a mystery for many. If you know before taking a meeting that the company isn’t a fit for you, don’t take the meeting and be upfront with why the company isn’t the right fit for you.
Provide descriptive and prescriptive feedback.
Offer feedback that entrepreneurs can use to strengthen their pitches. The effort to educate founders can yield more than your invested time and capital—it may help you reflect on, and really consider, why you’re not investing.
Hire more women and minorities to be part of your fund.
Create a diverse pool of investors who can help generate a natural pipeline of women and multicultural founders, as well as bring different perspectives to your fund.
Stay up to date on Inclusive Innovation & Opportunity
Thank You for signing up!