Funding rounds are a common way to build capital for businesses, with a seed round being used to help raise money for new startups. During this phase, family and friends of the business owners are able to invest in the entity. However, many Black owned businesses may not have that luxury.
The average money raised in a Friends & Family round is $23,000. However, the average Black founder raises less than $1,000 from the same round, making it less enticing for the business owner.
With this type of seed round typically raising such little money for Black founders, they are oftentimes forced to skip the round and seek investments from non-Black investment firms and incubators. This causes a problem.
When Black business owners skip Friends & Family rounds, this eliminates Black investors from the equation, and that leaves Black investors unable to build Black wealth with new businesses. But there’s a solution.
Black founders can seek investments from their friends and family through crowdfunding platforms, which allow for small investments. Let’s not leave any Black investor behind, especially the ones close to us.