More black women are taking the leap into entrepreneurship and entering the startup arena. Several black female brand owners like Melissa Butler of beauty company The Lip Bar are showing the world how black women can go from innovative ideas to a marketable business. What’s even more exhilarating is the lucrative possibility of these endeavors. For example, according to Forbes, The Honey Pot Co., a plant-based, black female-owned feminine care brand founded by Beatrice Dixon is one of the first forty women of color to raise $1 million in venture capital.
If your business is equipped with the right team, has a proven track record of success and demand, it may be time for your business to level up and seek additional funding. However, getting the finances to operate a startup is not for the faint of heart and shouldn’t be taken lightly. In fact, the harsh truth is the journey of accessing money for your business requires a substantial amount of preliminary planning, research, and a built-in network that many black women simply may not have access to.
“One of the hardest things for black women navigating the investment space is accessing a wide investor network. Although things are changing, this is still a space that lacks diversity. The investment world has a culture of “warm intros,” meaning knowing the right people who know the right people can at least get you through the door and taken seriously. It is important to build relationships with investors that go beyond just requesting a check,” said Zapenda Shop CEO Stella Safari.
There are several options when it comes to financing your business to consider, such as angel investors, friends and family, crowd-funding, grants, and startup loans. Knowing the advantages and disadvantages of each will better position your businesses’ sustainability. Whichever option you choose, BAUCE magazine caught up with four black female founders to help you better identify if your business is ready for financing.
Funding will help your business compete in a sizeable market
One thing to consider when you are beginning your search for funding is being able to prove your market is large enough to be lucrative and thus is able to offer a return for investors. Congo native, Safari suggests testing your business product first to verify a demand from consumers.
“One factor to consider is the size of the market. If your startup is playing in a big market and you think you have the potential to tap into that, it may be a good option to seek outside investment because it will allow you the resources to move quickly. Scalability depends on the market and the ambitions of the entrepreneur,” Safari suggests.
Your business’ growth depends on financing
If you recognize that funding can significantly increase your businesses’ ability to compete with your competitors, then perhaps it’s maybe time for you to seek investment. Cleveland, Ohio native LaToya Jackson is the Founder and CEO of Excel Capital Group. Her company provides business credit and funding solutions for entrepreneurs looking for funding to start, grow, and scale their businesses. With more than 15 years of experience of business to business sales with fortune 500 companies, she notes, she sought investment when she recognized it was time for her company to better compete and grow.
“In order to expand my business, I needed to raise more capital. That is when I sought and secured external investments. I have raised over $2 million over the last 5 years for my businesses. This has been a combination of business credit, term loans, savings, hard money loans, and private money with investors, merchant loans, and 401k/IRAs which was heavily used were used in my real estate business.”
Your business idea is lit!
LaKisha Greenwade is the founder of Lucki Fit, offering branding and strategic coaching services to founders and corporate companies. In regards to our corporate and private investment partners, LF provides the opportunity for first-look deals at innovations created by founders we support, which they can license or buy out our featured innovations to speed up their pathway to innovation. Additionally, for the company’s founders, LF provides mentoring opportunities, key stakeholder and investment introductions, education, etc.
Like many businesses, Grenwade knew her idea was an innovative solution that her target audience needed. Luckily for her, several investors thought the same.
“After self-funding the early-stage concept, I sought assistance from many of the common business competitions and grants to no avail. I received my first investment from a small family and friends round followed by a corporate sponsor. I knew it was time to secure funding because the feedback I received was that I was “on to something big” and there were tech industry folks studying me and my next moves.”
Your business has a proven track of success
Investors want to see that your business has earned some credibility through a track record of success. After being in business for 5 years, Andrea Martin is the owner of Luminate Brands said she had the confidence to take a leap for her business when she established result-driven success. Her company uses technology that offers high-quality educational services at an affordable rate. LB is the parent company of two educational service companies that offer tutoring membership for K-8 both online and at two centers in Chicago. These include TC Tech Prep is a test preparation company partnered with high schools nationwide to prepare students for the ACT and SAT.
“After 5 years in business, I had developed a proven service and new grant opportunities that would require an upfront investment. I was ready to grow. I knew it was time to secure because I could count on the results we produced and knew I had a sound way to return the investment quickly.”
For growing black woman-founded businesses, seeking business financing is a process and journey that requires long hours of research and homework, but most importantly, confidence. Having a clear plan of action to produce your desired results will suit your business and show investors that you are poised to reach milestones. Watch out for these signs to know when you’re ready to snag the financing you to bring your bright idea into fruition!