By Ellen McGirt
Updated: June 13, 2018 2:16 PM ET

Here are two facts to consider. The first: Black women are starting businesses in record numbers. The second: The median funding raised by all black women founders is $0.

These are some of the findings from a new study from ProjectDiane, the data collection arm of Digitalundivided, a research and acceleration organization which leads high potential black and Latinx women founders through the start-up process.

The 2018 report, which was created in collaboration with JPMorgan Chase, the Case Foundation, and the Ewing Marion Kauffman Foundation, highlights the entrepreneurial energy of black women, and the woeful underinvestment in their potential to move markets. It’s a clear problem for all sectors, particularly technology, says Digitalundivided founder and CEO Kathryn Finney.

“It means [losing] new ideas and new thinking in an ecosystem that still lacks inclusion and diversity,” she says. “But more important than that, women of color CEOs are able to access the kinds of untapped markets that investors are looking for.”

Some highlights from the report:

  • The number of startups founded by black women has more than doubled since 2016. There are 227 startups in the ProjectDiane 2018 database compared to 84 in 2016, a 2.5x increase.
  • The median funding raised by all black women founders is $0. While there is a growing number of black women crossing the million dollar venture threshold, the vast majority of black women-led startups are unable to raise any money.
  • Black women have raised only .0006% of the $424.7 billion in total tech venture funding raised since 2009.

The broader opportunity costs are worth considering.

“A majority of small businesses in the African-American community are founded by black women,” says Finney. Chronic underinvestment hurts everyone. “A sizable percentage of African-American households are headed by black women,” she adds. “So when black women are under-resourced it communities are under-resourced.”

Still, the trend line shows that there are reasons for some optimism.

Since 2009, black women–led startups have raised $289 million in venture or angel funding, much of that in 2017. Better still, some 34 black women raised over a million dollars in outside venture funding in 2017, compared with just 12 in 2015. And investments in entrepreneurial education by HBCUs is helping: More black women founders are graduates of Howard University than Harvard, Stanford, or MIT.

But the average raised by those outside of the million dollar club who are able to get the attention of investors is $42,000 — a 15% increase since 2016, but still not enough. And we know so little about what these founders need to succeed, which compounds their lack of visibility in the financial world.

This is part of what makes ProjectDiane’s work so valuable. They’re developing a unique snapshot into the barriers facing a cohort of entrepreneurs who have been completely ignored, even by academia. Until recently, less than 1% of the Harvard Business School’s influential case studies database — some 10,000 strong — featured a black executive of any gender, even though 9% of U.S. firms are now black-owned.

That, too, is starting to change. A new Harvard Business School class called Black Business Leaders and Entrepreneurship was created by an enterprising senior lecturer named Steve Rogers and uses brand new case studies featuring black protagonists. “We’re showing the true spectrum of the business world,” he said. “We are now righting this wrong and being more inclusive.”

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