Studies show that there is bias in how funding is distributed. Daire Burke argues that involving machines in the funding process is important – but so too is a willingness to change
AUTHOR: Daire Burke, Head of Canada at Swoop
Conscious or not, bias is built into many of the systems that underpin the world around us. When it comes to funding businesses, studies show that Black and female entrepreneurs are not getting their share of the funding their businesses need to succeed:
- A study by SME and startup funding specialists Access Commercial Finance, found that only 16 percent of applications received since July 2016 were submitted by women; and not only are women less likely to apply for funding, they also ask for less money on average.
- In the US, Black founders are seriously underfunded with figures showing that in the first half of 2021, Black founders received just 1.2 percent of all venture capital.
- In a major study of 700 Black women entrepreneurs, 78.5 percent of respondents reported that they had difficulty funding their business.
Swoop is proudly female-founded, has strong policies in place to remove bias from the hiring process and has 44 percent of senior roles filled by women (and we are working on the other six percent). All of this is irrelevant, however, if we just keep doing what the industry has always done and quietly become part of the problem. Our place is to sit between the business owners looking for funds and the lenders. What should we do?
The most important thing we can do is to champion entrepreneurship. Young people, who are already driving change in the workplace, should know that working for yourself is as valid a career path as finding a job. If the work environment is less than friendly, for whatever reason, working on your own terms is preferable to jumping barriers that others don’t seem to face.
Women often cite the expectations on them to look after their families as a reason not to go for a promotion at work or put in overtime. For such people, entrepreneurialism is attractive: when you are your own boss, you can take all the time out that you need to do the school run, look after elderly parents or work a part-time job that gives you some financial stability.
Disabled people, often the forgotten strand of diversity, are also great candidates for self employment: the opportunities to work from home brought on by the Covid epidemic has made a huge difference to those with mobility issues. As activist Ruby Jones told the BBC,
“The last 12 months has normalised digital access. Working from home means I am able to work a full-time job without exhausting myself to the point of hospitalisation.”
A sudden demand to return to the office could be the prompt that many disabled people need to consider setting up on their own: meetings, teamwork, hiring and operations have all gone digital, so why struggle in a space that is not built to accommodate you?
The rewards for addressing these inequalities are huge: as Boston Consulting Group notes:
“Businesses founded by women ultimately deliver higher revenue—more than twice as much per dollar invested—than those founded by men, making women-owned companies better investments for financial backers.”
There is some evidence that Black founders are becoming more interesting to backers, with the percentage of venture capital doubling since 2020 as communities realise the importance of supporting Black-owned businesses.
Swoop does not discriminate when it comes to finding the deals that are right for your business. We will continue to be a voice for the SME community that has strength in diversity: Black, female, disabled, neurodiverse, LGBT+ – at the end of the day, a good idea is all we care about and the case for funding is not based on anything other than that.
Finally, the most important thing we can do as a company is listen and learn. Sign up to Swoop, join our community on LinkedIn, try our service and tell us what you think. If it doesn’t work for you, we want to know and we’ll do what we can to put it right.