Black entrepreneurship is on the rise. New LinkedIn research reveals why many Black professionals are branching out on their own and what they say they need to advance equity.
More than 1,000 Black entrepreneurs were surveyed by LinkedIn as to why they chucked their professional careers to start their own businesses.
During the pandemic, Black professionals opted for entrepreneurship at unprecedented rates; the number of African-American business owners increased to almost 1.5 million in August 2021, up 38 percent from February 2020.
Fifty-four percent of Black entrepreneurs started their businesses to have financial security and independence, and 43 percent of them were motivated to grow their business to help create generational wealth for their families. And 1 in 5 Black entrepreneurs started their business because their former job wasn’t invested in their growth and development.
Nearly 50 percent of Black entrepreneurs who also have a full-time job said that remote work allowed them to pursue their business ventures more freely.
The new entrepreneurs faced unique challenges of being Black business owners, the survey found.
Due to the lack of financial institutions owned by or run by Blacks, 37 percent of Black entrepreneurs surveyed feel like they have to have someone white on their leadership team/executive board in order to get funding. Some 36 percent of Black business owners reported having a hard time securing financing. Thirty-five percent of Black entrepreneurs said they have been discriminated against when applying for funding, and 64 percent of Black entrepreneurs rely solely on personal savings to fund their businesses.
Black business owners said another challenge was the lack of access to the networks that could help lead to economic opportunities. A whopping 58 percent of Black business owners polled by LinkedIn believe they would be more successful if they had a “stronger” network.
Facing economic, market, sociocultural, and institutional barriers, Black entrepreneurs find themselves continually maneuvering systemic hurdles to create generational wealth.
According to research from McKinsey & Company, 58 percent of Black-owned businesses were at risk of financial hardships before the pandemic, compared with about 27 percent of white-owned companies.
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