By Debbie Gregory.

The number of women and minorities that acquires venture capital as entrepreneurs are not as good as one would hope. Only approximately 10-18% of all venture capital goes to teams that include women or people of color. Investors wrongly assume that women entrepreneurs, and entrepreneurs of color, are getting enough money or too much money already. This simply is not the case.

The majority of investors are mainly white males who do not see, speak with, or seek out women and/or minority founders. They often assume when they do finally come into face-to-face contact with this group that they are an odd aberration.

Unfortunately, the response of many venture capitalist is to subject woman and minority entrepreneurs to much more scrutiny than companies seeking capital headed by white males.   This discourages other women and minorities from contacting venture capitalist to fund their growth and future thus exacerbating the problem.

Women and minorities often are not even received all that much better by other women or minorities. Even established and successful companies, run by women or minorities, face a lot of challenges and difficulty raising money since they are still viewed as “too risky” by most investors.

The Venture Capital community is much less inclined to explore how diverse businesses might be the right fit for their fund or can present outstanding opportunities to take calculated expansion risks. They often tend to stay within their comfort zone and the same circles, businesses, investment advisors, etc. Change is sometime difficult to wrap their heads around and this often reinforces their investing bias.

Women and multicultural entrepreneurs represent a huge missed investment opportunity since together they represent a huge part of the United States population and quite a large number are successful entrepreneurs. Additionally, government agencies require corporations to do business with a diverse supplier network.

Overcoming the Challenges:

We all need to work to break the cycle to break investor bias!

Everyone needs to reconsider who they think of when they hear the word “entrepreneur” and include a wider, more diverse mix, into their thinking and investing. Women and minorities are just as talented, intelligent, and innovative as anyone else.  Often, they have had to deal with greater challenges to get where they are and have more practice with overcoming business obstacles and challenges. Women and minorities need to be as loud, forceful, and public about their business ventures as others who have done so for decades. They need to make a dedicated effort to get in front of Venture Capitalists for funding and consideration.

In this series of articles, we will examine the financial options and programs available to business owners to fund their business.

By Debbie Gregory.

In part 1 of this series, we have looked at the option of using your own money or assets to fund your business. Now we will look at using someone else’s.

If you are willing to take on investors, venture capital might be a good option. This can come from a single person, often referred to as an angel investor, or a venture capital firm. Angel investors are usually affluent individuals who provide capital for a business start-up, and more often than not are looking for convertible debt or ownership equity, as well as an active role in the company.

When you secure venture capital funds, you are not taking out a loan. You are offering a piece of the pie in exchange for funds to be used to drive your business venture down the road to success.

If you want to attract investors, do your homework in advance. Watch a few episodes of Shark Tank to understand how investors evaluate a potential investment. Although this is just a quick introduction, you’ll see how they value a company based on the amount of money requested and percentage of business offered, while inquiring about past performance, future projections, profit margins, the backgrounds of the principals, etc. You will see the importance of coming in with an appropriate valuation. Often times a deal is made based on the quality, passion, commitment, and integrity of the entrepreneurs.

Investors will want to review your business plan to make sure it meets their investing criteria. Most investment funds concentrate on an industry, geographic area, or stage of business development.

After determining the amount of the investment, you will need to settle on the terms and conditions. Venture funds are normally released in predetermined rounds. As the company meets milestones, further rounds of financing are made available, possibly with adjustments in price as the company executes its plan.

Veteran and Military Business Owners Association, VAMBOA,