§ TECH · 3 MIN READ
Raising Money When the Room Looks Like That
Black founders receive a share of venture capital so small it is usually written as a decimal. That is a fact to plan around, not a reason to stop, and the alternatives are better than they were.
By Culture
THE SHORT VERSION
Venture capital reaches a very small share of Black founders, consistently reported at well under one percent of United States venture dollars, which makes it a poor default plan rather than the only route. Revenue-based financing, community development financial institutions, SBA microloans, and grant programs each fund different business shapes, and most companies are better matched to one of those than to venture capital in the first place.
The number has been reported for years and it does not move much: the share of United States venture capital dollars reaching Black founders sits well under one percent.
Two useless responses to that. One is to treat it as a reason to stop. The other is to pretend it is not there and run the standard playbook anyway, then conclude something is wrong with you when it does not work.
The useful response is to notice that venture capital was the wrong instrument for most businesses regardless, and to go find the right one.
It is not a prize for a good business. It is a specific instrument for a specific shape: a company that can plausibly return the whole fund, meaning very large very fast, usually by getting big before it gets profitable.
If your business grows steadily, serves a defined market, and could be profitable in two years, it is a good business and a bad venture investment. Raising venture money for it forces a growth rate the business does not need and puts you on a clock somebody else set.
Deciding you do not want it is a strategic decision, not a fallback.
Community development financial institutions. CDFIs are lenders chartered specifically to serve communities banks underserve. They take applications a bank rejects, they underwrite on more than a credit score, and they usually provide advisory help alongside the money. This is the most underused capital source in the country.
SBA microloans. Smaller amounts, delivered through intermediary lenders, aimed squarely at businesses too small for conventional lending. Real money, real terms, ordinary process.
Revenue-based financing. You repay a fixed percentage of monthly revenue until a set multiple is reached. Costlier than a bank loan and far cheaper than ownership. A slow month costs you less, which conventional debt cannot say.
Grants. Corporate programs, city and county funds, foundations. Grant money is not dilutive and not repayable, and it is administered by people who have to give it away. The applications are tedious, which is exactly why fewer people finish them.
Customers. Deposits, prepayments, annual contracts. Money from a customer is the only capital that also proves the business works.
Three things make every one of these conversations different.
Revenue, at any size. A thousand dollars a month of real revenue changes the conversation more than the best deck ever built.
Books that exist. Separate business account, bookkeeping, filings current. Most rejections at the CDFI and SBA level are not about the business, they are about paperwork that could have been fixed in a week.
A number, and what it is for. Not a valuation. An amount, a use, and what it produces. Founders who cannot say what the money buys do not get it from anyone.
“Ownership is the most expensive money there is. Sell it last.”
There is county and city money that goes unclaimed every year because the application is unpleasant and the deadline is quiet. LA County has money for small businesses and most of it is not advertised, and making the business official is a one-week task, not a one-year one.
And whatever you build, build it so you keep it. Owning the thing outright is the whole difference.
- Should every startup try to raise venture capital?
- No. Venture capital fits companies that can plausibly return an entire fund, which means growing very large very fast. A steady, profitable business is a good company and a poor venture investment, and raising forces a growth rate it does not need.
- What is a CDFI?
- A community development financial institution, a lender chartered specifically to serve communities that conventional banks underserve. They underwrite on more than a credit score and usually provide advisory support alongside the loan.
- What makes a funding application more likely to succeed?
- Any real revenue, clean separated books with current filings, and a specific number tied to what it buys. Most small-business lending rejections come down to paperwork rather than the business itself.
