According to Forbes Magazine, only three percent of new businesses that received venture capital funds in the first quarter of 2019 was led by a woman or minority entrepreneur. This is not only potentially discriminatory but bad for the economy as well. Americans depend on male and female entrepreneurs of all ages and racial backgrounds to create new jobs. All entrepreneurs should have equal opportunities to pursue that dream.
Exploring the Reasons for Low Levels of Financing for Women and Minorities
When loan officers and venture capitalists meet with prospective new small business owners, they often ask different questions based on the race or gender of the applicant. This can cause loan applicants to answer in a certain way and jeopardize their chances of approval. However, it can turn out just as poorly for the female or minority entrepreneur if the person in charge of loan approval looks for the same characteristics in applicants despite their differences.
For example, lenders who look for decisiveness and aggressiveness in all loan applicants may find that few women possess these traits due to cultural conditioning. It turns out that such qualities make little difference in the profitability of a start-up organization anyway. According to Forbes, companies started and operated by people of either gender tend to reach the same level of profitability and in a similar timeframe. However, those with female ownership tend to take on less risk than male-operated businesses.
In 2016, the National Venture Capital Association conducted a survey that concluded only 11 percent of investment partners on venture capital teams are women. Racial minorities faced even greater under-representation.
What is the best way to resolve this problem? Forbes Magazine recommends doing away with the myth that some people, mainly white and Asian men, are born entrepreneurs while others are not.
Are You a Female or Minority Entrepreneur Seeking Financing?
Capital Connex is pleased to offer equal opportunity lending to all applicants. We invite you to contact us to learn more about what we have to offer.