They also should reflect on and rethink how they engage with female founders and evaluate their companies, which received only 3% of venture capital last year, said Bella Hughes, founder and president Shaka Tea. She added that even though Black women are starting businesses at a higher rate than any other demographic in American, they received only 0.2% of venture capital last year.
Speaking at a Taking Action For Justice webinar organized and hosted by Rabobank’s FoodBytes! platform, both explained that the current criteria used by investors and their biases – whether subconscious or not – place both minority and female founders at a disadvantage, and must be intentionally addressed to stimulate change and make better financial bets.
Rethinking the template of a successful company
In the days following the death of George Floyd, a Black man who died at the hands of a white police officer, LinkedIn and other social media platforms filled with promises by investors, companies and others to “do better” by financing or supporting more Black businesses.
To make good on this promise, investors first need to assess why so few Black entrepreneurs currently receive funding and consider how their criteria for evaluating companies and entrepreneurs could contribute to or perpetuate this funding discrepancy, said Jordan Buckner, the founder and CEO of the superfood energy snack company TeaSquares.
“So many investors will look at what does a successful company look like from the past five or 10 years and then will try to find similar looking companies to invest in the future,” he said.
He explained, the problem with this strategy is “a lot of people of color and women have been negatively affected by lack of investment opportunities and lack of business opportunities. And so, if you look back just demographically, you won’t see as many visibly represented people of color. And so, as investor, if that’s what your using to make that decision, you’re going to leave out a bunch of investment opportunities that could be really, really great.”
Buckner also recommended investors reconsider how they measure risk and the actions they take to turn the tables in favor of the founders they finance.
For example, if an investor is unfamiliar with the experiences or community that a Black founder comes from or is serving, “take time to listen to the entrepreneur and the great amount of research and expertise they have and take time to understand their actual experiences and then take a risk on them,” Buckner said, adding, “No matter what company you’re investing in, it is always going to be a risk. So, I would say, release some of your preconceived notions and get to know those entrepreneurs, get to know markets that you are unfamiliar with and help to support and serve those markets.”
When evaluating a company’s potential, Buckner also advised investors not to assume that the founder’s demographic will influence or limit the reach of their product.
“I have also seen bias … where investors will see a person of color or a woman and think that their product will only serve that market that the founder represents versus being able to apply towards a general mass market approach,” he explained.
‘You need to take a white male with you’
In trying to compensate for investor bias, Julianne Ponan, the owner and CEO of the superfood bread company Creative Nature, said she often downplayed her role in the company – a move that placed both her business and potential investors at a disadvantage.
“When I first started out, going for investment, I was very apprehensive, to be honest, and decided to take a lot of advice from carious people, consultants, who had built and sold businesses, and they all told me, ‘You need to take a white male with you [to pitches],’” even though she had a business plan, proven traction in the market and revenue figures that demonstrated profit, Ponan said.
“So, I every single investment pitch, I took my partner who is white and a man and … it was quite funny because the majority of the meeting, he didn’t actually contribute to,” but investors “would always direct all questions to him and he would then have to refer back to me. … All of these questions that I was having to answer, but I was going through someone else. And I felt like I was invisible.”
Ponan said she also removed her photo and sometimes replaced her name with her partner’s name on pitch applications to increase the chances of securing a meeting.
Frustrated by these experiences, Ponan said she bootstrapped the company for the first three years and then found more success with crowdfunding, which she said, “sort of leveled the playing field slight, allowing us to tell our story a lot better.”
While the investment industry has a long way to go to address race, gender and sexuality-based biases, so too does the broader food and beverage industry, Ponan, Buckner and Hughes noted during the webinar.
In the days following Floyd’s death and the rise of the anti-racism movement, each company took steps to assess and address racism, including how the movement impacted their employees, how it influenced their business operations and what they could do to help lead change.
At TeaSquares, Buckner said he was quick to acknowledge that personal and professional lives are not fully separate and so he asked all of his employees how the social unrest was impacting them.
“There’s an expectation that business and personal life needs to be separate. And I think really we understand that things that happen in the world and our personal lives effect our business. So, it’s really important we create space for those conversations,” he said.
Hughes echoed this, noting she gave staff paid time off to reflect on the movement. Her company also made donations to local Black-led organizations in the name of every team member, including its paid summer interns.
Ponan looked within her organization to assess its diversity, and said she was upset to realize no Black people were on her manufacturing team and she had extremely limited diversity within the larger company.
After digging into the cause, she discovered that very few, if any, people of color were applying for positions and so, she said, her company will actively encourage people of all races and religion to work for it. She encourages others to take a similar active recruitment stance.
Hughes said she also uses her position to amplify and uplift Black entrepreneurs and founded businesses.
“It’s really been important to me over the past year to ensure that the type of mentorships I received four years ago or three years ago, I’m giving that back. So, all of my mentees are people of color and primarily women, and I am very, very focused and committed to that,” she said.
When speaking with reporters or others about Shaka Tea’s news or success, she said she also asks reporters how they are addressing anti-racism and provides them with recommendations of Black entrepreneurs or businesses that they might want to cover.
As important as Buckner said he believes it is to intentionally highlight Black owned businesses, he said the he hopes that these entrepreneurs are evaluated for their merit and achievements, not just the color of their skin.
“Having a lens for identifying not just Black but minority and women-owned companies and providing them with a platform to share their brand, I think, is incredibly important. And giving those brands the opportunity to succeed and get the same kind of shelf space and recognition as any other company, I think is extremely important,” he said.
But, he added, “Ideally, as the representation grows, getting to a point where we can look at a business as just being a successful food business, that just happens to be Black owned instead of supporting every business as Black-owned or woman-owned business because it creates a separation point as being different from just another business owner. But I think it’s really important to get to that point where we just see all businesses together, but also understand the unique struggles that each founder might go through.”
Failing forward: Reflect, act, listen, repeat
In the process of listening, analyzing previously unknown biases and trying to support the anti-racism movement, many companies have made statements or taken actions that have elicited negative feedback – but Buckner says this isn’t innately ‘bad.’
“Social media is on fire right now with lots of different discussions going on and it can be scary to put out a statement and feel like the rest of the world is going to jump on you because you’re still learning,” Buckner said.
“But,” he added, “I think its okay to put out a statement, but really listen before you speak to the people who are communicating their issues. And, at the same time, if you do receive criticism, instead of taking that offensively and walling off, I would say, listen and say, ‘thank you.’”
If the criticism or root of a comment is unclear, either take it at face value or seek to learn more by asking questions, Buckner said.
“Instead of getting defensive, really ask and understand why, so that you can be further educated by that and continue to grow,” he said.