This US-based fintech startup led by a woman is helping women of colour in business get funded while educating them about multiple methods of business financing.
Historically, women have faced a profound lack of support in business financing, and it still remains the number one hindrance listed by women in business. According to the Harvard Business Review, women-led startups received only 2.3% of VC funding in 2020.
National statistics in the US have shown that women get approved for business loans at rates about 20% lower than the same rates for men. They also receive smaller loans than men, with only 4% of business loan dollars (US$1 out of every 23) going to women. Women of colour face an even bigger challenge.
Atlanta-based startup, EnrichHER, is a digital platform that connects investors with Black women-owned businesses. Launched in 2017, the startup has helped 163 companies connect with over US$14M in funding.
The Tech Panda spoke to financial expert and gender equality advocate, Dr. Roshawnna Novellus, Founder and CEO of EnrichHER about the challenges women of colour in business face and how the fintech platform is going about helping them.
I strongly believe that in order for society to change, access to resources must change. Diversification of business ownership is part of the solution
She informs that predatory lending agencies have a history of targeting women of color, which is why it’s important to be knowledgeable about multiple methods of business financing, which EnrichHER’s Business Financing Accelerator covers.
“I strongly believe that for society to change, access to resources must change. Diversification of business ownership is part of the solution. Business owners are the brokers of goods into the community, and they influence politics and legislation,” says the woman who was featured in the Defy Logic campaign for “defying expectations” and ignoring limits in order to create change in their respective fields.
“We want to change the entrepreneurial ecosystem by eliminating bias in the financial sector, creating trustworthy financing options, and increasing the availability of capital. Then we will see women thriving, with an abundance of economic power and contributions to the economy, ultimately resulting in women-led business being able to raise as much capital as they want and need,” she adds.
The Knowledge of Finance is Significant for Women Businesses
Among the many challenges, the lack of education on how loans work along with the lack of respect when it comes to women who run businesses tops, Novellus says.
“From EnrichHER’s beginning, people asked me, ´Is it a charity?´ ´Can women even build businesses?´ ´Do women know how to repay loans?´ There are tons of successful women out there. Time and time again, people keep telling me there isn’t enough data that shows that women know how to build businesses, and it infuriates me. I wanted to ask them, ´Where are you living?´” she says passionately.
Time and time again, people keep telling me there isn’t enough data that shows that women know how to build businesses, and it infuriates me. I wanted to ask them, ´Where are you living?
She adds that this is a big part of the problem, because such people often include those who make the decisions on which companies get funded and get a chance to move forward.
“If I’m a woman building a high-tech company, I need people who have money to fund my business so I can ramp up. Luckily, I did find some people to help me while I bootstrapped and was creative in how I could move forward,” she recalls.
“Things are slowly beginning to change. It has been gratifying to see things like #buyblack become important on a national and international level, because it means there is a growing recognition of the connection between economic power and the advancement of historically marginalized groups. But there is still a lot of work ahead to achieve true economic equality,” she says.
Novellus´ story begins with her mother, who was a working full-time teacher as well as a serial entrepreneur.
“She showed me that women have the capacity to do anything, and she was intentional about teaching me to be in control of my own financial power as a Black woman. She was well aware of the racism and sexism embedded in our country’s financial system and knew I would need to be equipped against it early, she recalls.
Her mother began taking her to investment meetings at the high school where she taught when Novellus was twelve, so that she could learn how to plan, budget, and identify sound investments. After moving to Atlanta, Novellus saw other Black executives and entrepreneurs taking major strides in the tech ecosystem. But after consulting with women-led business owners for a few years, she realized that the number one problem these business owners have is access to capital.
Despite Black women being the most educated people in the country and starting businesses in greater numbers than any other racial demographic, Silicon Valley doesn’t trust the entrepreneurial skills of women like me, apparently, who has two bachelor’s degrees, a master’s degree in IT, and a Ph.D. in systems engineering
And the statistics speak for themselves. A study revealed that Black women received 0.0006% of venture capital investment between 2009 and 2017.
“Despite Black women being the most educated people in the country and starting businesses in greater numbers than any other racial demographic, Silicon Valley doesn’t trust the entrepreneurial skills of women like me, apparently, who has two bachelor’s degrees, a master’s degree in IT, and a Ph.D. in systems engineering. Although the Black Tech Ecosystem in Atlanta is thriving, more resources and funding need to be available for Black women in all industries and geographies, especially those that aren’t served by VC,” she says.
This is why she founded EnrichHER.
“My vision is to use EnrichHER’s fintech platform to support 100,000 businesses with women founders, women CEOs, and women in leadership positions across the US. And to make funding those businesses accessible for all kinds of investors, not just the wealthy,” she says.
What They Do
EnrichHER is a fintech platform that matches revenue-generating companies led by women and founders of color to individual and institutional sources of funding. Since 2017, EnrichHER has deployed upwards of US$4 million through its platform and matched business-owners to US$13 million in working capital through its Accelerator.
“Over the years, I’ve remained passionate about being a solution for the lack of access to capital for women founders,” says Novellus.
By providing capital, coaching, and connections, they fuel the fastest-growing demographic of business owners. Their network has engaged with over 23,000 advocates through its digital community and in-person activations.
The EnrichHER Philosophy
Capital is indeed a grave problem for women of colour. In fact, less than 8% of all the VC dollars go to companies with women-led founders. The number drops to below 1% with women of color. And when you look at combining sources like the SBA (Small Business Administration government agency) and alternative lenders, the number is still only at 18%.
“Women build businesses at a quicker rate than men and in fact, businesses run by Black women are the #1 new business category. Clearly, there is a disconnect between the industry trends and what’s happening in the financing sector,” Novellus informs.
Providing capital for businesses with diverse leaders is the key to economic empowerment, inclusive economic growth, and overall gender equality
This disconnect led her to decide that she could do something about it.
“I firmly believe there has been no true innovation and push to disrupt the current financial landscape, so I said, Hey, I have a Ph.D. in computer engineering and finance, and have studied marketing and community building for over ten years. Let me try to see if I could do something to change the statistics,” she says.
“EnrichHER’s philosophy is that providing capital for businesses with diverse leaders is the key to economic empowerment, inclusive economic growth, and overall gender equality. Once women founders have a larger role in the economies of our communities, we will be able to build a society that is more reflective of our needs, desires and aspirations. As the number of sustainable women-led businesses increases, society as a whole will benefit from inclusive job growth, as well as products and services that better reflect the input of the people they serve,” she adds.
For 2021, EnrichHER’s goal is to partner with corporate impact funds, foundations, and individual funders to deploy US$30 million to companies with diverse founders and leadership. In fact, the startup is launching a US$ 5,000 grant program for companies led by women and people of color.
“We hope this funding will allow companies to scale by empowering them to launch a new product, run a successful marketing campaign, or purchase new equipment or software tools to streamline their operations,” says Novellus.
Her advice for other women founders is to relax from time to time.
“Don’t stop chasing success, but also don’t forget to balance your time between work and relaxation. It’s easy to lose yourself in the monotony of vicious work cycles. Find something that lights you back up. Not only will you benefit from it personally, but professionally as well. You can’t run your life or even your business on an empty tank,” she concludes.