Building a Supportive Network: How Black Women Can Find Funding for Their Ventures
You’ve launched an incredible new business, and now you need money to keep it going. Where do you start? It’s one of the most challenging questions for new founders. For many, it’s also the most intimidating process in the early stages of the entrepreneur journey. The first step is knowing how much capital you need, and which route of funding is the best for you and your business. Much of that will depend on the size of your company, its projected growth, and what your business currently needs in order to take it to the next level.
From venture capitals (VC) and angel investors to bank loans and grants, the breadth of options can feel overwhelming. Experts often recommend starting with a round of friends and family funding. This means tapping into your closest network of people who support you and who will denote money toward the growth of your business. GoFundMe and CrowdFunding are easy-to-use platforms where you can create a funding page and quickly collect donations.
If you have already exhausted your friends and family funding and are ready to take the next step in securing larger capital, here are some options for you to consider — from the easiest to get, to the hardest.
CDFIs
Community Development Financial Institutions (CDFI) are Treasury Department-certified financial institutions that provide banking and financial services to underserved communities. According to the Urban Institute, while CDFIs come in many forms — they can be for-profits, nonprofits, credit unions, banks, loan funds, or venture capital funds — they are all designed to help communities grow equitably by offering affordable and sustainable financial services, as well as affordable credit and investment capital. Elevate by Grameen America falls into this category.
Elevate by Grameen America: Elevate by Grameen America offers affordable loan capital, business development training, and asset- and credit-building tools to benefit emerging Black business women. The requirements to qualify are simple and the application process is easy. Click here to learn more.
Bank Loans
If you are looking to get capital quickly without giving up a percentage of your business, a small business loan could be a good option. A small business bank loan gives you access to capital, with the intent to repay the loan with interest. If you have strong credit and steady financial gains, this could be a good option. In this case, it’s important to remember that you will have to pay the loan back with interest, so you will end up owing more than you borrowed. Here are some bank loans to consider for your small business:
Wells Fargo BusinessLine® Line of Credit: This Wells Fargo line of credit offers competitive rates for businesses with at least two years in operation, up to $150,000.
OnDeck: OnDeck offers a business term loan and a business line of credit to help meet your unique funding needs, and can tailor your repayment terms to fit your business.
Grants
Federal and state agencies, as well as private companies, offer small-business grants that provide free money for startups and existing businesses. Most grants do not require you to pay back the capital, nor do they require a percentage of your company in exchange for capital. However, grants can be challenging to acquire due to the volume of applicants, and it may not be the best option if you are looking for a large amount of funding. Finding grants can require a lot of time and research, but can be a very rewarding option. Here are a few grants to consider:
Government Grants at grants.gov: This government site offers the most comprehensive database of funds the government is going to give away. The database often includes grants specific to Black founders and women founders. You can also find grants based on your industry and where you live.
Google’s Black Founders Fund: The Google for Startups Black Founders Fund provides cash awards — without giving up equity in return.
Amber Grant: Every month, WomensNet awards three $10,000 Amber Grants to women-owned businesses. The application process is simple, but there is a small fee to apply.
Angel Investors
Angel investors are individuals who provide funding in exchange for a share of the startup's equity. Similar to VCs, angel investors are looking for equity in your company. When pursuing this funding option, you should be comfortable giving up a percentage of your business, as well as answering to and reporting to investors. You can have multiple angel investors, or just one — it depends on your funding needs and how much equity you are willing to give up. Here are a few online platforms that connect founders with angel investors:
AngelList: AngelList builds the infrastructure that powers the startup economy, providing investors and innovators with the tools to grow. It also offers a directory of angel investors who are eager to invest in early-stage companies.
Gust: Gust allows you to apply to more than 750 of the world’s leading Angel Investment Groups in one go, simplifying the process of finding an angel investor.
Venture Capital
Venture Capital (VC) is a type of private equity that provides funding to startups and early-stage companies in exchange for ownership stakes in the companies. When considering this route, it’s important that you feel comfortable giving up a percentage of your company. When reaching out to VCs, you will need to have a solid pitch deck that convinces VCs that your business has potential, a clear vision for the future of your business, and a strong understanding of your audience, market, and growth potential.
VCs typically come into consideration at the pre-seed funding stage, when a startup is focused on building its initial team, further developing its business plan, and conducting market research. There are a handful of VCs that focus on Black founders and women founders specifically. Here are some VC’s to consider:
Visible Hands: Visible Hands offers a capital-backed accelerator program for early-stage, underrepresented founders building high-growth, tech, and tech-enabled businesses.
Colab Capital: Colab Capital invests in companies that have at least one founder who identifies as Black/African American.
Fearless Fund: Fearless Fund invests in women of color-led businesses seeking pre-seed, seed level, or series A financing.
If you are still unsure of which option is best for you, this Tory Burch funding finder offers a quick assessment of your business and capital needs, and will then offer a recommendation on how best to move forward in acquiring capital. Looking for something more personalized? Sign up for an info session with a representative at your nearest Elevate by Grameen location. They will help you plan your next steps based on your goals and current situation.
Though this step in your business journey may feel overwhelming, there are communities for Black founders that offer support and guidance. You may face rejection during this process, and that can be discouraging. But remember, all you need is one “yes”. Lean on your network during this time. You don’t have to do it alone!