The Problem With Capital Access
Starting a business takes money. But not everyone has equal access to it. For many founders—especially Black, Latino, Indigenous, and veteran entrepreneurs—capital is hard to find. The system is uneven, and the numbers prove it.
Less than 2% of all venture capital in the U.S. goes to Black founders. Latino founders receive around 2.1%. Women of color? Even less. Despite being more likely to start businesses, these groups face major funding barriers. Many get told “no” before they finish their pitch.
Veterans, too, face challenges. According to the U.S. Census Bureau, nearly 6% of all businesses are veteran-owned. But most lack the early-stage funding needed to grow fast or hire teams. Many rely on personal savings or credit cards—options that don’t scale.
It’s not a lack of ideas. It’s a lack of access.
Why the System Favors the Few
Most early funding—whether venture capital, loans, or even grants—goes to people with networks. Warm introductions matter more than pitch decks. Investors fund people who remind them of themselves. That means Ivy League schools, Silicon Valley zip codes, and familiar social circles.
One entrepreneur said it best: “I had the numbers, the traction, and the product. But they didn’t know me, so they didn’t trust me.”
This creates a cycle. If you weren’t already in the room, it’s hard to get in. And without access to funding, most founders can’t compete.
The Cost of Missed Potential
This funding gap doesn’t just hurt founders. It hurts the economy.
A McKinsey report estimated that closing the racial wealth gap could add $1 trillion to $1.5 trillion to the U.S. economy by 2028. That’s more jobs, more tax revenue, and more innovation.
Founders from underserved communities build businesses that reflect their neighborhoods. They solve real problems. They hire locally. They create value where it’s often overlooked.
But they need support to get there.
What’s Not Working
Plenty of programs say they want to support diverse founders. But many fall short.
Some require too much documentation. Others offer mentorship but no money. Some ask founders to “prove” themselves more than others would have to.
David Rocker has worked with several founders facing these hurdles. “They had revenue and real customers,” he said. “But the banks said no because they didn’t fit the traditional mold. That’s when I realized the system wasn’t broken—it was built that way.”
Real Solutions That Move the Needle
1. Start With Trust, Not Credit Scores
Traditional credit checks don’t tell the full story. For new businesses, cash flow, contracts, and customer growth matter more.
Lenders and investors should look at these signals. For example:
- Do they have paying clients?
- Do they meet payroll on time?
- Are they growing month over month?
Use real-time metrics instead of outdated models.
2. Fund the Founder, Not Just the Idea
Investors love shiny ideas. But underserved founders often solve boring but important problems—like logistics, local health care, or infrastructure.
Stop chasing trends. Start backing people who understand their markets. People who know how to stretch a dollar and deliver real value.
Give them flexible capital. Not just pitch-contest prize money or debt with high interest. They need seed money, working capital, and time.
3. Build Founder-Led Funds
Founders know what other founders need. That’s why we need more capital in the hands of people who’ve built businesses themselves—especially people from underrepresented backgrounds.
Funds like Backstage Capital, Harlem Capital, and Collab Capital are proving this works. They invest earlier, they move faster, and they support better.
More institutional capital (from pension funds, endowments, and banks) should flow into these types of funds.
4. Make Mentorship Practical, Not Performative
Founders don’t need vague advice. They need answers to questions like:
- How do I structure a cap table?
- How do I hire a fractional CFO?
- What should my cost of customer acquisition be?
Set up office hours with specialists. Pair new founders with operators, not just investors. Make it easy to ask “dumb” questions without judgment.
And pay mentors if needed. Free advice isn’t always the best advice.
5. Streamline Access to Local Capital
Not every founder wants VC money. Many want small loans, grants, or equipment leases.
Cities and states can help. They can launch local microfunds or match local investors with businesses.
Community Development Financial Institutions (CDFIs) are a good start, but many are underfunded. More support means more small business growth.
What Founders Can Do Now
This system won’t change overnight. But founders can still act.
- Join founder networks. Groups like BLCK VC, LatinxVC, Veterans in Residence, or Hello Alice provide tools and community.
- Pitch wide. Don’t stop at your local area. Apply to national accelerators and pitch events.
- Track your wins. Show growth with numbers—revenue, retention, reviews.
- Ask for help. Find an advisor who’s one step ahead. Copy what works.
What Investors and Leaders Must Do
- Take more cold meetings. Don’t rely on intros. Make it a goal to meet five new founders a month.
- Review your portfolio. How diverse is it—really? Fix the gaps.
- Create an open door. Host informal chats. Let founders learn without pitching.
- Fund outside the trend. Look beyond software. Back real-world businesses with strong unit economics.
Conclusion
There’s talent everywhere. But capital still flows to the same few places. That needs to change.
Making capital more accessible isn’t charity. It’s smart strategy. It builds stronger communities and a more resilient economy.
As David Rocker puts it, “The best ideas aren’t always the loudest. Sometimes they just need someone to say yes.”
Let’s be the ones who say yes. Not just with words—but with real support.
