Small Business A ‘Herstory’ of Black-Owned Businesses

And the funding plight female founders have contended with for decades.

By Chanize Thorpe Illustration: Sol Cotti
PUBLISHED 02/01/2024 | 8 MINUTES

You’ve probably seen the news congratulating Black women for being the fastest-growing demographic of entrepreneurs. They are—and we couldn’t be happier. But there are a few other trends you should be aware of too.

In 2021 Black women made up 17% of new business owners, compared to 10% of white women and 15% of white men. But only 3% of these Black women-run businesses are “mature”—which means not many of them are lasting very long, according to the Harvard Business Review.

Why? One big reason is a lack of funding—yes, still. To grow a business beyond its startup phase, you need access to capital. And that capital is unevenly distributed in U.S. society, particularly to Black women.

Here, we take you on a journey through history and highlight some Black businesswomen who have triumphed despite the odds.

The Rise and Fall of Entrepreneurship

Black pioneers have no doubt played a vital role in shaping our economic landscape. Central heating using natural gas, caller ID, animation used for memes and the technology behind 3D movies are just afew of the inventions from Black female entrepreneurs that have changed the world.

But with very few funding opportunities—and a pervasive racial bias to contend with—early Black luminaries were often limited to creating small, siloed enterprises that only serviced (and employed) other Black people. And their success fluctuated with the times.

Many of the first Black businesses were started in response to racial discrimination: Segregation “created market opportunities for black entrepreneurs to step in, make money and meet the demands of the black community,” Mehrsa Baradaran, author of The Color of Money: Black Banks and the Racial Wealth Gap, told Forbes in an interview.

Indeed, during the Reconstruction era, the period after the Civil War, there was a big increase in Black-owned businesses as the government tried to integrate newly enfranchised people into society. But Jim Crow laws continued to isolate Black communities, spurring the creation of more local, family-run business in the early to mid-1900s.

For example, the economic and cultural mecca known as “Black Wall Street” in Tulsa, Oklahoma—boasting everything from Black-owned barber shops and salons to clothing stores, grocery stores and restaurants—was formed because Black people weren’t allowed to shop in white neighborhoods.

In the years since, Black businesses have experienced ebbs and flows—declining during the Great Depression, rising again in the 1990s, struggling during the 2008 recession and triumphing once more post-recession.

Early Trailblazers

We can’t talk about the history of Black-owned businesses without mentioning Madam C.J. Walker and her haircare products for Black women. Walker, the first in her family to be born free after the Emancipation Proclamation, was a talented entrepreneur who, in the late 1800s, decided to try her hand at making and selling her homemade scalp treatment—sure, there were other products for Black hair on the market, but they were largely manufactured by white businesses.

So, armed with her formula and nary a bank to back her, Walker sold her wares door-to-door and in churches across the country. In 1908, she had enough capital to build her own factory, hair and manicure salon, and training school, and went on to became America’s first Black woman millionaire. Her products are still sold to this day through retailers like Sephora and, in 2020, her inspirational story was turned into a Netflix series called Self Made.

And let’s not forget the country’s first Black woman billionaire, Sheila Johnson. She started her journey to success in 1980 when she co-founded BET (Black Entertainment Television), a network for African American music, entertainment, news and more—things that were often excluded from mainstream frequencies. In an interview with The History Makers, Johnson said launching the channel was a difficult undertaking because “to get a network on the air, you gotta get advertising to keep it on there.”

But several years later, when Black music videos became all the rage, advertisers started paying attention and that’s when “the books started to balance.”Johnson sold BET to Viacom in 2000 for $3 billion and now, in her 70s, is a hotel industry mogul and the first Black women to co-own professional sport franchises—she has three!

Other inspiring female entrepreneurs through the ages include Clara Brown (1800–1885), a hugely successful laundry business owner who invested her fortune in gold mines (she was the first Black woman to take part in Colorado’s gold rush); Christiana Carteaux Bannister (1819–1902), the “hair doctress” of the East Coast who opened tons of salons and then used her wealth to assist with the Underground Railroad and start the Home for Aged Colored Women in Providence, Rhode Island; and Sarah Goode, one of the first Black women to receive a U.S. patent for her foldaway bed invention.

The Current State of Things

In recent years, the number of Black-owned businesses has grown exponentially—with Black women leading the charge.

But more than half of Black-owned companies are still turned down for loans, a rate twice as high as white business owners (and the amounts they get are much smaller, too). That’s why more than 60% of Black women entrepreneurs self-fund their startups—even though less than 30% of these entrepreneurs have household incomes over $75,000.

There is some good news though: Even though men still get the lion’s share of venture capital funding (startups led by Black women only received 0.34% of venture capital spent in the United States in 2021, according to Crunchbase), the dollars invested in Black-female owned companies are on the rise. By July of 2022, businesses owned by Black women had received more than $494 million in funding, the highest amount in the past five years—in 2016, for example, it was $52 million, and in 2017 it was $157 million.

While a step in the right direction, this increase in funding coincides with an increase in venture funding in general—in other words, Black founders are still only receiving a tiny fraction of what other startups receive.

The pandemic also made things exceptionally harder for Black women. Shynea Hunter, for example, a single mother of six, was laid off from her job like so many others and decided to open her own business. But she quickly discovered that “there wasn’t much help or guidance for African-American women like me,” she says. “I had to do a lot of research on my own to find funding and grants, but the lists of requirements for applying were astronomical.”

So, Hunter took a chance and used her own savings, advertised on Facebook and “relied on word of mouth and flyers” to get her brand up and running. In July 2021, she opened YoniqueSpa, a spa and boutique in Anniston, Alabama. “The business has been one of the best investments I have ever made,” she adds.

Resources for Black Entrepreneurs

With more attention being paid to the growing number of formidable Black women founders seeking funding, there is also a growing number of organizations and resources available to them: Black Girls Ventures, Black Women Talk Tech, Twenty65, New Voices Foundation and Backstage Capital (to name a few).

So channel your inner Madam C.J. Walker and get started.

Millie content is licensed from Meredith Corporation, publisher of Millie, Real Simple, InStyle and more.

Chanize Thorpe is an African-American lifestyle writer and proud member of the LGBTQIA+ community whose work has appeared in dozens of national publications and websites for over 20 years.

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