Barriers for Black Startup Founder and Patent System

While the patent system is now open to everyone, it wasn’t that way for a large swath of the Black population. That effect is still present today. Because of the 1857 Dred Scott ruling, American citizens of African descent were not considered U.S. citizens and therefore unable to patent their own inventions. Attorney, entrepreneur and associate vice president for innovation at Clemson University, Shontavia Johnson, cites other examples of barriers that prevent Black entrepreneurs from achieving success.

Location can limit Black entrepreneurs’ business potential

One of the biggest challenges facing Black entrepreneurs is location. Sixty five percent of African-Americans live in states with a lower economic opportunity index than the US average. These residents tend to live in low-income neighborhoods and therefore are not exposed to lucrative business opportunities. Fortunately, there are some steps that Black entrepreneurs can take to improve their chances of starting and growing a successful business. The first step is identifying opportunities in their neighborhoods.

Research has shown that Black business owners face numerous barriers to growth and profitability. These barriers include social and economic factors. Economic barriers arise due to disempowerment, while market barriers come from unmet needs or access challenges. Sociocultural barriers result from exclusionary, biased, and discriminatory attitudes toward Black entrepreneurs. Institutional barriers, on the other hand, stem from systems in which Black-owned businesses operate. Identifying and addressing these issues is the first step toward ensuring the emergence of a diverse and inclusive business community.

Policymakers must also work to create a business ecosystem that supports Black entrepreneurs. These policies and ecosystems must be supportive of Black entrepreneurs and ensure that they have equal access to financing and other resources. It is also important to promote and support the leadership of Black business owners. Investing in their development will help improve US society by addressing the racial wealth gap and reducing mistrust between Black entrepreneurs and institutions.

Lack of access to capital

There are several challenges facing minority-owned businesses, including the lack of access to capital. A recent report by the Kaufman Foundation highlights the problem. This lack of capital affects startups of color disproportionately. As a result, there is often no one to help these founders obtain financing, which makes it impossible to create and sustain a successful business. The patent system is also unaffordable for small businesses and those with limited capital.

Lack of social networks

The lack of diversity in the tech industry continues to be a problem, particularly in the Silicon Valley tech scene. While companies like Google, Facebook, and LinkedIn are committed to diversifying their workforces, the number of Black startups remains small. That reflects the lack of diversity among the top executives, venture capitalists, and other stakeholders in the tech ecosystem. The tech industry is known for its agility, yet has not made significant strides in improving workplace diversity. Consequently, it has largely shaped the San Francisco Bay Area in its own image.

While Black people are underrepresented in tech and innovation careers, their number continues to rise. According to the National Science Foundation, Blacks make up just 4.31 percent of engineering undergraduates and 7.45 percent of science and engineering occupations. That’s a glaring omission when one considers that Black people make up just 13 percent of the U.S. population. Another interesting fact: only a small percentage of startup founders and investors in venture-backed companies are Black. In addition, Black women received less than 0.006 percent of all venture-capital-backed startup founders between 2009 and 2017.

There is a growing body of evidence that lack of social networks is a major barrier to black startup founders. Some black entrepreneurs tell their stories in private email chains and in tight groups. One story starts with a racist comment from a venture capitalist, and ends with the investor’s decision to pass on the company. This reveals that there is a persistent bias among white tech executives and venture capitalists.

Lack of support

There is a growing public demand for greater diversity in the tech industry. Companies like PayPal and PepsiCo are responding to this demand by making racial equity a priority. These two companies are not alone, however. The startup and venture world is also grappling with these questions. But there is an opportunity to make meaningful change. One recent Stanford Graduate School of Business graduate studied the experiences of Black startup founders in Silicon Valley.

In the last year alone, Silicon Valley has invested $223 million in Black startup founders – a fourfold increase over last year. However, this investment represents only a small percentage of overall venture funding to Black entrepreneurs. However, Crunchbase data indicate a significant increase in this area over the last year, coinciding with racial justice activism. However, the current support and resources for Black startup founders are woefully inadequate.

But it is not just white people who should be providing more support for Black startup founders. Venture capital firms and other investors must also help Black founders gain access to the patent system. For example, a company in Boston may be able to get more funding if it hires non-White sales agents. And, of course, the more allies it has, the more likely it is that the founders of color will benefit.

In addition to the patent system and patents, Black-owned SMBs need support in building their capabilities and sharing knowledge. This support can come in the form of grants and subsidies to Black-owned businesses, which are often underfunded and underutilized. Additionally, Black-owned SMBs can be hubs of a business network. By creating a supportive ecosystem for Black-owned businesses, public, private, and social sectors can remove institutional barriers for these entrepreneurs. In this way, we can ensure that the outcomes we are seeking are inclusive and equal.

Lack of mentorship

The lack of mentorship and funding for black startup founders is a problem that tech companies are grappling with. While many have pledged to donate $50 billion to black communities in 2020, few provide any funding. Instead, many tech companies lure black founders into their programs with promises of meeting investors. Despite these promises, few receive the funding they need to move their companies forward. This is a problem that must be addressed in order for black founders to achieve their goals.

Without access to the right networks, resources, and relationships, a black startup founder is more likely to fail than succeed. Without mentorship, a black startup founder will not have the experience and knowledge to make the right decisions. In addition to preventing a black startup founder from making mistakes, mentors help the mentee realize the landscape ahead. For example, 90 percent of businesses require access to funding to make it through the early stages. While an idea is not enough to create a successful business, the ability to secure financing is necessary.

However, the barriers to effective mentorship are similar to those in other areas of practice. Many mentees find it difficult to establish trusting relationships with their mentors. Moreover, lack of racial parity hinders sponsorship and mentoring opportunities. Nevertheless, the lack of mentors of color in the IP community creates a unique mentoring opportunity. Most IP professionals have academic backgrounds and lack a diversity of background, which creates a lack of diversity among mentees.

While Black entrepreneurs face significant challenges when trying to establish a viable business, they must have confidence in the ability to succeed. Mentorship and mentoring programs can help them achieve their goals. The lack of mentors for black startups is a significant barrier to growth for many. In addition to removing institutional barriers, mentors can help build trust and strengthen bonds between Black entrepreneurs and the ecosystems they need to thrive.

https://www.ycombinator.com/documents/
https://techcrunch.com/
https://www.uspto.gov/learning-and-resources/startup-resources
https://www.sba.gov/business-guide/plan-your-business/fund-your-business
https://hbr.org/1998/11/how-venture-capital-works
http://patentpc.com/
http://uspto.gov/

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