Although the number of minority-owned businesses grows every year, there is still a disparity when it comes to minority entrepreneurs and their access to financial capital and business opportunities. These gaps are a result of centuries of historical discrimination and there are biases that persist that prevent minority entrepreneurs from accessing the same opportunities as their white counterparts. Minority entrepreneurs are constantly facing roadblocks and obstacles that make starting a business that much more difficult.
Race & Ethnicity
Racial and ethnic minorities frequently face discrimination when attempting to start a business. Studies have found that Black entrepreneurs in the United States are less likely to be approved for bank loans, even if they are just as or more creditworthy than their white peers. Black entrepreneurs faced more scrutiny, were less likely to be helped with their loan applications, and were less likely to be invited back for follow-up appointments than white entrepreneurs in similar or inferior financial situations. This discrimination is one factor that contributes to more than half of Black-owned businesses being rejected for bank loans, with less than 47% of Black financial applications getting approved. In the United Kingdom, access to finance is also one of the most significant obstacles faced by ethnic minority-owned businesses (EMBs). Although various ethnic minority groups have different experiences when it comes to financing their businesses, almost all ethnic minority groups face higher rejection rates than white entrepreneurs when applying for bank loans. Black African firms faced the highest rate of rejection, being four times more likely to be denied a loan than white firms. In the United States and the United Kingdom, racial and ethnic minorities often feel discouraged from even applying for loans due to fear of rejection.
In Germany, a lack of racial demographic data makes it difficult to make conclusions regarding discrimination in entrepreneurship. However, according to the head of the Federal Anti-discrimination Agency, Bernhard Franke, complaints about racial discrimination have doubled in the past five years, with most instances of discrimination occurring in the workplace or while looking for a job.
Gender equality and female entrepreneurship are necessary for economic development. However, women entrepreneurs often face discrimination based on their gender. There is a patriarchal bias that women do not possess the personality traits or skills necessary to start and run a business, which results in women being taken less seriously when introducing business ideas. One survey found that business ventures pitched by women were considered less viable and worthy of investment. This discrimination results in men being more than twice as likely as women to start new businesses (in the United States). It also results in workplace discrimination, with 56% of female entrepreneurs saying that they experienced harassment, discrimination, or both as business owners. In addition, only 45% of those women decided to formally report their experiences, likely for fear that they would be taken less seriously in the workplace if they were to file an official report. In addition, there is a gender gap in financing, especially among women of color and women in developing countries.
LGBTQIA+ * entrepreneurs often feel pressured to hide their gender and sexual identities when applying for business loans or pitching business ideas. They do not feel as though LGBTQIA+ participation in entrepreneurship has been normalized, and therefore tend to hide their identities, especially in particularly competitive fields. As a result, it is nearly impossible to determine the number of businesses that have been started or are run by LGBTQIA+ members. However, there are instances of LGBTQIA+ members who have been ignored or avoided by investors due to their gender or sexual identity.
What You Can Do
The discrimination faced by minority entrepreneurs is a result of a long history of social prejudice, and it is not possible to change attitudes overnight. Laws are in place to try and prevent workplace discrimination, and more and more lawsuits are filed every year to hold businesses accountable when they do not maintain inclusive and supportive work environments. However, one of the main ways that you can encourage minority entrepreneurship is by supporting businesses owned and run by women, racial and ethnic minorities, LGBTQIA+ members, etc. You can also support organizations that work to support and encourage minority entrepreneurs. In Germany, the Association of German Women Entrepreneurs advocates for female entrepreneurship, women in leadership positions, and more positive work environments for women. Other organizations include the Minority Supplier Development UK, a non-profit organization focused on advancing ethnic minority-owned businesses, and the Black Business Association, which advocates for African-American business owners throughout the United States.
As An Entrepreneur
As a minority entrepreneur, you are going to undoubtedly encounter obstacles that your white counterparts do not have to overcome. However, many minority entrepreneurs claim that these obstacles encouraged them to work even harder to make their businesses successful. Do not let these obstacles discourage you from starting a business that you are passionate about building! Just a few examples of minority entrepreneurs who are also focused on social progress and sustainability include Jasmine Crowe, a black female entrepreneur who founded Goodr, a company that aims to reduce food waste through the use of technology, and Kave Bulambo, an entrepreneur based in Berlin who founded both My Career Path, a career coaching service, and BlackInTech, an organization focused on empowering black people in the technology sector. Two additional entrepreneurs, Sonja Jost, founder of DexLeChem GmbH, and Ali Mahlodji, founder of whatchado, have been speakers at the Entrepreneurship Summit in previous years.
The 2021 Entrepreneurship Summit will be taking place from October 22-24. Although it is scheduled to take place online, there will hopefully be an in-person component in Berlin if conditions improve. Get inspired and get your tickets here!
*LGBTQIA+ = Lesbian, Gay, Bisexual, Transgender, Queer/Questioning, Intersex, Asexual or Aromatic + all other sexual identities