By Paula Pandolfino, CEO and founder, Txeya
Over the past 20 years I have been lucky enough to have received the funding and support to start a number of successful businesses. But this isn’t the case for everyone, and especially not for entrepreneurs from diverse or underrepresented backgrounds.
Unfortunately, many women, black, minority ethnic and LGBTQ+ entrepreneurs are finding it difficult to get the funding, despite having amazing and innovative business ideas.
If we look at women as an example, while they make up around 50% of the global population, female-only founders receive less than 6% of all venture capital (VC). This is even more shocking for black entrepreneurs, who receive less than 1% of VC funding.
These disparities are extremely frustrating, and exceptional entrepreneurs are being completely overlooked. Investors are also missing out on the opportunity to receive superior returns by not backing them.
Research has shown that when female-founded start-ups to receive funding, they’re much more likely to be successful and deliver a higher amount of revenue than businesses not led by women. In fact, more than twice as much per dollar invested.
If we are to focus on levelling the playing field for diversity-led businesses, then we need to stop talking about the issue and start acting on it. And this means making sure the road to diversity starts with education and continues with access to all the resources and expertise they need.
The first and foremost priority is to make it much simpler for diversity entrepreneurs to receive the funding they need to start and grow their business.
Seeking the right investor who is likely to put money behind the business can be a lengthy and challenging process, especially for those from underrepresented backgrounds.
We need to make sure that these entrepreneurs are equipped with the right tools and have the right level of support in place that’s needed to grow their network and find the right types of investors — those who are actively looking to expand their portfolio with amazing businesses founded by diversity entrepreneurs.
By supporting diversity entrepreneurs through education, mentorship and access to financial resources, they are much more likely to receive the funding they need, setting them up for the success they deserve.
But while connecting entrepreneurs with the right investors is key, we also need to ensure they have solid business support in place and the access to coaching, mentorship programmes and training that will help them succeed beyond the initial funding stage.
There’s certainly more work that needs to be done in order to create a level playing field for diversity entrepreneurs, but helping diversity-led businesses connect with the right types of investors will help to take a positive step in the right direction.
Paula Pandolfino is a serial entrepreneur and investor with over 20 years of experience in banking and technology. One of the founders of Txeya, Paula is passionate about creating equality in entrepreneurship and ensuring that no great business fails due to a lack of funding and support.
She has held senior roles with some of the largest blue-chip banks in the industry, such as Deutsche Bank, Barclays Capital and RBC, managing teams across various sectors of financial markets.
Paula loves to cook (and eat!), read and enjoys playing sport.