Wharton Professor Sergio Salgado has published a paper detailing the decline in entrepreneurship in t
Wharton Professor Sergio Salgado has published a paper detailing the decline in entrepreneurship in the U.S. “because high-skilled college graduates have found that they can earn more in well-paying jobs than starting their own business.”
Maybe. But there is another academic paper that tells a different story.
“In the United States, an astounding 17 percent of Black women are in the process of starting or running new businesses. That’s compared to just 10 percent of White women, and 15 percent of White men.” — Harvard Business Review article (May 11, 2021) by Donna Kelley, Mahdi Majbouri, and Angela Randolph, all professors at Babson College.
This suggests what the new founders might look like, but while this sounds like great news for Black women, the fact is that they often struggle to raise capital and face more obstacles in building their companies.
I talked with three San Diego Black women business owners about their experiences. All three have advanced degrees, which aligns with the research that Black women who start businesses are highly educated with more than three-fourths having a college degree compared with one-fourth in the general population.
After a career in the corporate world, Cassandra Schaeg started SIP Wine & Beer LLC in 2016 in Escondido because she wanted to follow her passion of highlighting BIPOC (Black, Indigenous, People of Color) winemakers and brewers. “The wine industry is an old White man dominated industry,” she said.
Initial funding of $80,000 came from a combination of her personal savings, a loan guaranteed by the U.S. Small Business Administration and a loan from Accessity, which makes small-business loans focused on entrepreneurs of color, women and immigrants. And Schaeg had one key advantage in that she owned a condominium that she was able to pledge for the SBA loan, an asset that many Black women don’t have.
During the pandemic, Schaeg had to close her normal retail doors. Undaunted, she pivoted to offering wine tastings on Zoom. Customers would pick up the wine at her shop and then join the Zoom event. Combined with some government assistance, she was able to survive to celebrate SIP’s fifth anniversary with the Fresh Glass Fest this past July. Next year, the event will coincide with Juneteenth, celebrated on June 19 to recognize the end of slavery in the U.S.
Jasmine Sadler and Erika Wise don’t own a home, and both have had to fund their startups out of sweat equity and savings.
Sadler, who has a degree in aerospace engineering, started The STEAM Collaborative in 2014 while she was working in the industry. “I was doing engineering presentations about my journey, and I was still dancing as a ballerina. There was this new acronym STEAM (science, technology, engineering and math). I looked in the mirror and it was me.”
She said as part of her marketing program, “I was able to make connections between how planes fly through the air and how I fly through the air.”
The goal of The STEAM Collaborative, which is a for-profit venture, is to increase the number of diverse children pursuing STEAM initiatives.
In 2019, Sadler left her secure aerospace job to focus full-time on her company. Revenue comes from individual membership programs and partner organizations with whom she works to develop programs, as well as winning a few startup competitions. She has participated in CONNECT All at the Jacobs Innovation Center and credits the entrepreneurship program with helping her to understand various pieces of the entrepreneurial puzzle.
Like Sadler, Erika Wise initially started her company, Wiser Way Media, as a side hustle. With no home equity to pledge for a loan, she has had to fund her business from savings and sweat equity. In 2017, she left her corporate job because she saw no opportunity for advancement and wanted to focus full-time on building her digital marketing business.
“I wasn’t where I wanted to be financially, and I wanted more freedom. For me and a lot of Black women, entrepreneurship is a necessity for life to lay a foundation for the next generation,” she said.
Black women clearly have the potential to play an important role in our country’s economic future, but I agree with the HBR author’s conclusion that “this dream will not be complete without targeted efforts that enable Black women entrepreneurs to grow and sustain their businesses”.
Rule No. 679: Success should be color blind.
Neil Senturia and Barbara Bry are married, serial entrepreneurs who invest in early stage technology companies. You can hear their weekly podcast on innovation and entrepreneurship at www.imthereforyoubaby.com. Please email ideas to Neil at email@example.com.