Forget focusing on killer zombies and jack-o’-lanterns this Halloween. Let’s focus on the scary things Black tech entrepreneurs must overcome to build and operate killer companies.
We spoke with 13 Black tech entrepreneurs who decided to not let their ideas lie dormant and haunt them. These 13 founders chose to persevere through the fears to disrupt their industries.
The statistics and information we highlight here provide some support for the things these Black tech entrepreneurs listed as the scary parts of launching and running a startup as well as a few calming numbers.
Sure, there is the thrilling part of building something with your own hands and seeing the market take to it, but there are times when an entrepreneur has to address mental and physical hindrances to keep their dreams alive.
We thank these founders for being transparent. Their shared confessions are a testament to their ability to overcome their fears. They are all leaders, innovators, and champions in their respective fields.
“Other people’s doubts are scary. As we watch the debacle of for-profit companies not making a profit (WeWork, Uber, Lyft, and etc.), we (minority and women tech founders) are being penalized and left to starve because investors don’t want to invest in an unprofitable tech company. Minority women founders are stereotypically given fewer opportunities for success, less money, but are treated as we though we caused the problem.” – Brooke Sinclair, Velour Imports.
There is a graveyard of “unicorns” and the products they created — 56 percent of unicorns are overvalued. It’s too early to know the consequences of WeWork and others failing. However, the lack of support for minority women is frightening. Minority founders are still suffering. Crunchbase reported earlier this year that 1 percent of 10,000 venture-backed founders polled were Black. Brooke’s doubts about investors funding without bias are well founded.
“The thing about innovative startups is that many don’t have a business model or a set of activities proven to make money. There is always a little bit of doubt as to whether I’m going to go ‘boom’ or go bust.” – Sonja Ebron, Courtroom5.
Forbes recently shared that 42 percent of innovations fail due to long development time. Founders need two-to-three times longer than they expect to validate a business model. A Harvard Business Review study says that when entrepreneurs are in their early stages, “they may improvise or experiment to bring this vision into better focus.” It takes time to get past the initial stages and even come to the realization of a startup’s success or failure. That time along the way can be scary.
“I’m outside of my comfort zone. I don’t want to make a mistake. I put a lot of pressure on myself to be successful and a top contender in the industry.” – Mark Savage, Premier Crypto Digital Collectibles.
The numbers can be terrifying.
There are more than 582 million people around the world in the process of starting or running their own business, The Hill reported in 2017. In the U.S. alone, there are 30.2 million small businesses with more than 8 million categorized as minority-owned, the Small Business Administration says. Getting lost in the sea of entrepreneurs is not difficult — 42 percent of polled startups analyzed in a CB Insights report failed because of the lack of a market need for their product. Knowing these numbers and focusing on being on top amounts to a lot of pressure to succeed.
“As a solo founder, the scariest part for me is worrying if I’m doing things correctly. Somehow my confidence vanished. But I’m finding it again.” – Arabia Umrani, Unwind.
Going it alone can feel scary in the beginning and it could take longer to find the right direction, but there is hope.
Solo founders take 3.6 times longer to reach scale stage compared to a founding team of two and they are 2.3 times less likely to pivot, according to the 2011 Startup Genome Report. Here’s the hope: Data analyzed by TechCrunch in 2016 showed that 45.9 percent of companies raising $10 million-plus did so with solo founders. More than 52 percent of the same startups had a successful exit.
“I am currently balancing a full-time job, family responsibilities, what’s left of a social life, and community commitments while launching my startup as a bootstrapped solo founder. My fear is falling off the tightrope I’m walking and burning out before the startup takes off.” — Adrian Claudius-Cole, Gritly Co.
Jeff Bezos and other billionaire CEOs say there is no such thing as a work-life balance. Work-life is more of a circle than a balance and if you’re happy at home, you’ll be happy at work and vice versa, Bezos says. The 2015 Hiscox DNA of an Entrepreneur Report shows one in five U.S business owners take no holiday at all while others barely take half their holiday time — a recipe for burnout. Additional startup statistics from 2019 show that 89 percent of U.S. business owners regularly work weekends and 20 percent claim to work 50-to-59 hours.
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Working a job and running your startup may burn you out, but it will also slow down your rate of scaling. “Founders that don’t work full-time have 4 times less user growth and end up raising 24 times less money from investors,” according to the 2011 Startup Genome Report.
“The thing about being an entrepreneur is that life comes at you fast. You start growing, start gaining visibility, and building a team. You are expected to bring your A-game every day, even when there are some days when you can’t.” – Jumoke Dada, Tech Women Network, HUE Tech Summit, and Dadaverse
Being a solo founder can mean that if you do not put in the work, nothing gets done. It also means that the more pressure you receive, the more likely you are to make decisions quickly. Scaling too fast is another way to fail, according to Serious Startups. Having a co-founder seems to keep entrepreneurs from premature scaling.
“The scariest thing about ProjectMQ is I’m funding it with my gas and lunch money. At any given time, I can be at a place where I have to choose between driving to and from my day job, and eating.” – Marcus “Blockchain” Howard, ProjectMQ.
In 2018, personal funds were the most popular small business financing method (77 percent). The Guidant Financial 2019 Small Business Trends survey reported that 33 percent of small businesses lack capital. According to the National Association of Small Business’s 2017 Economic Report, 30 percent of businesses continually lose money.
Yet, when we think about Netflix, Uber and more, we can see that small business startups have a lot in common with internationally known startups. If they haven’t thrown in the towel, surely smaller startups can find some inspiration to keep going.
“Something I have found scary is the fundraising process, which carries an inherent fear that my project could fail. With TrustaBit, we made impressive accomplishments early on as a bootstrapped startup and have recently gained great traction, yet I know the tremendous impact that we could make with strong backing from a VC or angel investor.” – Saritta Hines, TrustaBit.
How entrepreneurs handle financial challenges over choosing a loan, asking family and friends, crowdsourcing and raising funds from accredited investors can make the difference between success and failure.
The average short-term business loan amount is $20,000 and the average loan amount from a traditional bank is around $150,000, Fundera reports. While the amounts can be helpful for some small businesses, they don’t provide nearly the same amount of runway as the median seed-stage deal in the U.S. and Canada, which was $1.4 million in Q2 of 2019.
“Wondering if funding will come through before the next payroll.” – Anthara Patrice, My-Beautyfill.app.
Twenty-seven percent of businesses do not receive the funding they need. Twenty-one percent of U.S. entrepreneurs have resorted to using their credit cards to fund their businesses, according to Hiscox’s 2015 DNA of an Entrepreneur Report.
“As a ‘nerd,’ I think I know what I need to know or can at least Google what I don’t. When I am stuck and have to ask others, I have that overwhelming feeling that they are going to take our idea and run with it. I feel as though I have to try to keep parts of our startup, top secret as best as possible.” – Christopher Green, Game Drive, LLC.
Worried about others pushing you out of your industry? Nineteen percent of businesses are outcompeted. This is why having the right financial and human resources matter to an entrepreneur. “Founders that learn are more successful. Startups that have helpful mentors, track performance metrics effectively, and learn from startup thought leaders raise 7x more money and have 3.5x better user growth,” according to the Startup Genome Report.
The scariest thing about being an entrepreneur? “Finding tech talent that can understand the vision and help me execute it successfully, with as little funding as possible in the beginning.” – Shakeia Kegler, GovLia.
Finding talented staff or contractors is the hardest thing for 27 percent of entrepreneurs, according to Freshbooks’ Second Annual Self-Employment report.
“As a young entrepreneur, going all-in on a critical decision is scary. To outsource or do it ourselves? To scale now or refine processes? To keep raising from family or explore other options? I try to make the best out of every decision, but not knowing what’s on the other side is scary.” – Anthony Powell II, Legal Linda.
The right mentors significantly influence a company’s performance and ability to raise money. Endeavor says companies whose founders were mentored by top-performing entrepreneurs are three times more likely to become top performers.
“As a Black founder, my biggest fear is not reaching a significant amount of success in time for my parents to enjoy it while they are still young. I know building a successful startup doesn’t happen overnight, so I constantly feel like it’s a race against the clock when it comes to my attempt to giving back my parents what I believe they deserve for working so hard to come to this country and raising me and my siblings.” – Darrel Frater, PromSocial and Advance Homes Kitchen and Bath Cabinets, LLC
First- or second-generation immigrant founders feature significantly among the largest Fortune 500 companies. They account for 52 percent of the top 25 firms and 57 percent of the top 35 firms, according to the Center for American Entrepreneurship.