Racial Identity and the Entrepreneurial Journey

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Wednesday, April 6, 2022
By Susana Santos, Eric Liguori, SherRhonda Gibbs
Photo by iStock/skyNext
Business schools must do far more to understand and support founders from underrepresented backgrounds.
  • Researchers seek to understand how factors that shape founders’ identities, such as race and gender, influence their entrepreneurial journeys.
  • Two primary obstacles often hinder entrepreneurs from underrepresented backgrounds: social stereotypes and lack of access to funding.
  • Through small, targeted programs, business schools can empower founders from underrepresented backgrounds and help their businesses thrive.

Every single new business begins with an entrepreneur. Entrepreneurs are the founders, owners, visionaries, and makers who turn ideas into startups and, eventually, into successful ventures. From an academic research perspective, understanding who these individuals are—and how they and their ventures are unique—is among the most intriguing areas of study. From a business education perspective, cultivating the next generation of entrepreneurial thinkers, doers, and creative problem solvers is arguably a goal for every business school.

But we also know that entrepreneurs from underrepresented backgrounds often must overcome greater obstacles than others. To learn how to better support these individuals, the three of us recently conducted a study about how they develop their entrepreneurial identities. We wanted to know not only who these entrepreneurs are, but also how our institutions can guide and assist underrepresented aspiring entrepreneurs in the most impactful ways possible.

Entrepreneurship as an Expression of Identity

Prior research demonstrates that entrepreneurs are not just creating innovative ventures. They also are purposefully engaging in entrepreneurial activities that are meaningful and aligned with salient aspects of their identities, such as gender, age, race, and other attributes—or what we call their self-concept. An individual’s self-concept motivates a person to start a business; it influences an entrepreneur’s behaviors, strategic responses, and decision making, as well as the opportunities a new business owner exploits.

In many ways, entrepreneurial ventures can be viewed as “extensions of the founders.” That’s why, as scholars, we want to understand how self-concept is reflected and experienced throughout the entrepreneurial journey. We want to know how entrepreneurs answer the question, “Who am I?”

Our own research explores the dynamics of entrepreneurs’ racial identity, which is a particularly complex component of an individual’s self-concept. We focused on the African American community, where race historically has had a large impact on entrepreneurs’ personal, educational, and professional experiences and opportunities.

Entrepreneurial ventures can be viewed as “extensions of the founders.” That’s why we want to understand how self-concept is reflected and experienced throughout the entrepreneurial journey.

We analyzed 19 interviews recorded between 2016 and 2021 of successful African American entrepreneurs. Our objective was to learn how they express their racial identities, not only in their businesses, but in their personal lives and the legacies they are creating for future generations. For these African American founders, their racial and entrepreneurial identities are intertwined. They express their identities across many dimensions of the ventures they start and the social movements they join. Moreover, we found that race has played a large role in two significant barriers they have had to overcome in their entrepreneurial journeys.

Barrier No. 1: Overcoming Stereotypes

The first obstacle that successful African American founders face involves society’s stereotype of what an “entrepreneur” looks like. Many of the individuals we interviewed said they constantly had to fight against the widely held perception that entrepreneurs are predominantly masculine and white.

As Y-Vonne Hutchinson, founder of the California-based diversity strategy firm ReadySet, put it, “There’s a culture of pattern matching, which is very limiting.” When many people picture an entrepreneur, they picture someone like Mark Zuckerberg, she said. “They don’t picture a Black kid. … They don’t picture a Black woman.”

Songe LaRon, founder of Squire, a New York City-based online platform that supports barbershops, compared being a Black entrepreneur to being an astronaut. “It’s still going to be challenging to be an astronaut, period, let alone a Black entrepreneur,” he said. “The odds are kind of against you.”

Barrier No. 2: Accessing Funding

Such racial stereotypes can make it especially difficult for entrepreneurs from underrepresented backgrounds to find funding for their enterprises. In 2021, for example, only 1.4 percent of all venture capital funding in the U.S. went to African American founders.

Tope Awotona, an entrepreneur in Atlanta who founded the team scheduling platform Calendly, shared his own experience trying to raise capital. “Everyone said no,” Awotona said. “Meanwhile, I watched other people who fit a different profile get money thrown at them for [expletive] ideas. Those VCs were ignorant and short-sighted. … The only thing I could attribute it to was that I was Black.”

Black female founders face hurdles shaped by both race and gender stereotypes—what some scholars call the Black woman’s burden. That was the experience of Cheryl Contee, founder of the digital marketing agency Do Big Things. “As an all-female team with a Black female co-founder, it wasn’t easy. To get funding, we had to work really hard, and I experienced some real discrimination,” Contee said. “Despite [pulling] in millions of dollars in revenue, we were still seen as risky, which to me seemed very, very strange.”

Robin McBride and Andrea McBride John of California-based McBride Sisters Wine also believe that their gender and racial identity contributed to the challenges they faced in accessing funding. “Black women are the least funded of all entrepreneurs,” they noted. “Black women aren’t seen in this space as having a history of being successful, [or] even being present. So, no, there weren’t people beating down the door to invest in our company.”

Sharon Chuter, founder of the London-based beauty brand UOMA, also decried the lack of capital available to Black-owned businesses. Black women “are the fastest growing group of entrepreneurs in this country,” she said. “They set up businesses faster than any racial group in this country, yet there is no funding.”

Making funding more accessible to underrepresented founders would go a long way toward creating an even playing field for all entrepreneurs, said Robert Johnson, founder of Black Entertainment Television. “If you want to change economic discrimination and income inequality between African Americans and white Americans, or minority Americans and white Americans,” he argued, “you’ve got to figure out a way to provide a flow of capital into the hands of entrepreneurs and others who are fully committed and fully capable of generating and maintaining wealth.”

Linking DEIB Programs to Entrepreneurship

Although the importance of supporting these entrepreneurs is clear, this importance is not always reflected in business school programming. For example, diversity, equity, inclusion, and belonging (DEIB) is embedded in six out of AACSB’s nine accreditation standards, and many business schools have programs and centers focused on achieving DEIB outcomes. At the same time, an emphasis on innovation and creative problem solving is interwoven throughout AACSB’s standards, and many of the same business schools have programs and centers focused on entrepreneurship.

Far fewer schools have programs linking their DEIB initiatives to their entrepreneurship programs in ways that deliberately support underrepresented aspiring entrepreneurs. Yet, research shows that if we want to achieve greater equity for underrepresented founders, we must design programs that help them build their businesses and express their identities in new and different ways.

Programs supporting underrepresented entrepreneurs do not have to be expensive or complex. Schools can launch speaker series, start mentorship programs, or even do something as simple as inspiring a student club to lead the charge.

One such program designed with this goal in mind is Rowan University’s Startup Opportunity Fund. This competitive fund awards nonequity startup seed funding, ranging from 500 USD to 2,500 USD, to underrepresented aspiring entrepreneurs to help them launch and grow their new ventures. Some other schools have launched similar initiatives.

Each year, we offer funding to approximately 30 student founders , and we are considering increasing that number in the future. However, we recognize that aspiring entrepreneurs need more than just capital. They also need access to other resources. For that reason, in addition to providing seed funding, the Startup Opportunity Fund provides selected applicants with priority access to all on-campus startup events, mentorship by accomplished entrepreneurs and industry leaders, guaranteed space to exhibit at Rowan’s annual New Venture Expo, podium time to pitch their companies to our industry advisory councils, dedicated co-working and meeting space, and curated invitations to small, peer group lunch-and-learn sessions.

Let’s Seek Action, Not Perfection

If we, as business school educators and administrators, want to make a difference, we have to address the impact of racial and gender identity on entrepreneurship. By creating more small programs designed to uplift specific underrepresented populations, business schools can begin to effect change, create inclusive ecosystems, and empower students in their entrepreneurial pursuits.

These programs do not have to be expensive or complex to implement, and they do not require years or even months of planning to build. Schools can quickly launch thematic speaker series or targeted mentorship programs to support underrepresented founders. They can allocate a portion of their budgets to providing seed funding, or they can find ways to strengthen their connections to the entrepreneurship community. They could even do something as simple as inspiring an alumni organization or student club to lead the charge.

If each business school adopts a “seek action, not perfection” approach and commits to piloting a new small initiative, our collective action will be a powerful, unified step forward. Such action will help us continue to build more diverse, inclusive, and equal entrepreneurial communities.

Susana Santos
Assistant Professor, School of Innovation and Entrepreneurship, Rohrer College of Business, Rowan University
Eric Liguori
Founding Head, School of Innovation and Entrepreneurship, Rohrer College of Business, Rowan University
SherRhonda Gibbs
Dean, Monfort College of Business, University of Northern Colorado
The views expressed by contributors to AACSB Insights do not represent an official position of AACSB, unless clearly stated.
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