What inspires someone to become an entrepreneur?
I’ve often wondered what gives some people the energy and focus to take their idea and turn it into reality. I know so many others who dream but don’t ever take action to venture out on their own. They love working and contributing to an organization as part of a team and enjoy the security that comes with it.
But for some of us, entrepreneurship is like an itch that demands to be scratched. For me, it’s the challenge of creating something that makes an impact on people’s lives.
Creating a viable business requires more than just a great idea. There are the long hours and a commitment to doing the work without knowing if your work is going in the right direction or not. Of course, it also requires capital, sound decision making, strategy, the right team and luck. Without these ingredients, the business starves and fails. And even with these, the odds are the business will not make it.
Despite all the roadblocks, obstacles and low likelihood of success, 93% of entrepreneurs ultimately believe the journey is worth it, according to a new study commissioned by NPR’s "How I Built This," The Secret Lives of Entrepreneurs.
After reading the study, I awoke to an even bigger struggle than simply achieving success: the lack of diversity in the startup world.
Women, people of color, and especially women of color, report significant inequities when it comes to entrepreneurship. Women keenly experience gender bias as an entrepreneur (41%) and women of color experience a racial bias (33%).
What Do These Biases Look Like?
It can take the form of investors asking women of childbearing years why they should invest in her because they see her as a risk, or women-owned businesses viewed as a hobby rather than a serious venture.
A female physician I know shared with me that she was once told by a senior partner that she had no reason to become a partner because she had recently married and her husband made a lot of money.
Women entrepreneurs (20%) say they must charge less than their male equivalents to get and keep clients. Women also report undervaluing themselves, as they experience the imposter syndrome.
People of color are more likely to lack access to capital, especially women of color, according to the "How I Built This" study. The numbers back up this perception -- only 3% of all venture capital is going to female-led companies, according to research by Crunchbase. Founders who are women of color get less than 1% of venture capital each year.
People of color also report having less access to mentorship and support groups, with women of color experiencing this the most. With a lack of mentorship, fledgling entrepreneurs face difficulty in navigating the small and large decisions of their business.
A female entrepreneur I know shared with me that when she first started her business, she didn't know how to find the funds her company needed to grow, or if she was making the correct decisions about expanding. She made some bad decisions that she's still paying for today.
The Real Ramifications To These Roadblocks
With less access to venture capital and traditional banking, minority and women-owned businesses are less likely to have the capital to fund future growth. Considering an already high failure rate in new companies, women and minority entrepreneurs are on an uneven playing field.
Not only does this make the journey harder, but it also discourages people from even starting.
What innovations in technology and medicine are we leaving on the table when we have these barriers to entrepreneurship?
What Can We Do To Start Leveling The Playing Field?
While women are beginning to make inroads into the venture capital world, more needs to be done to fund underrepresented groups. Here’s what you can do:
• If you’re a successful entrepreneur, focus on hiring a more diverse group of employees, and mentor them to be leaders of their own. Take the time to be a mentor to other women or persons of color exploring the startup world.
• If you’re a female business owner, share your valuable knowledge and decision making processes with other women.
• If you’re an aspiring entrepreneur, make it a priority to attend panel discussions, connect with others and participate in business groups. Setting up this network is crucial to future success.
As more diversity is encouraged in the startup world, it can only serve to benefit our society, increasing innovation and opportunity for all involved.
Originally published in Forbes on January 8, 2019.