Black Americans have played an integral role in shaping the US business landscape. Many of our greatest technological advancements, such as caller ID, automatic elevator doors, and the traffic light, have sprung from the minds of creative Black innovators. In this article, we look at Black entrepreneurship in the United States.
Originally developed in response to racial discrimination, many Black-owned companies, such as Madam C. J. Walker’s hair products, leveraged massive market potential created by segregation. Visionary Black entrepreneurs recognized vast opportunities to meet the demands of their community. As author Mehrsa Baradaran points out, with limited work opportunities and high job instability, entrepreneurship appealed to many Black business pioneers, enabling them to attain self-sufficiency, build substantial business empires, and ultimately serve and employ fellow Black Americans.
The beginnings of Black entrepreneurship in the United States
After the Civil War, during the Reconstruction era, the number of Black-owned businesses in America soared as the country cast off the inequities of slavery. By the early 20th century, Black American entrepreneurship suffered a significant decline, due in part to the Great Depression, coupled with the resurgence of US legislation enforcing racial segregation. As Tiffany Howard, Fellow of the Congressional Black Caucus Foundation explains, Black businesses were specifically targeted during this era, leading to a rollback of many significant advancements achieved by Black business leaders.
Throughout the 20th century, Black entrepreneurship continued to rise and fall throughout the United States. Since the dawn of the new millennium, the number of Black-owned US businesses has increased exponentially, with female Black business leaders fueling much of that growth.
In 2003, world-famous entrepreneur Oprah Winfrey became America’s first Black billionaire, with other Black Americans soon following her lead. Despite this progress, Black American entrepreneurs continue to face significant challenges.
According to US Black Chambers President Ron Busby, one of the biggest barriers to success faced by Black entrepreneurs today is a lack of access to capital. As he points out, Black business leaders have the creativity, acumen, knowledge, and manpower, but without access to capital, new business ideas and concepts simply come to a standstill, or worse, they are manipulated or stolen.
Increased investment in minority-owned companies
Many Black Americans featuring on the Forbes 30 Under 30 list share a collective ability: to persevere against all odds. As part of concerted efforts to level the playing field, many wealthy entrepreneurs of color have invested significantly in the creation of investment funds concentrating on minority-owned ventures. In June 2019, real estate magnate Don Peebles opened a $500 million fund to invest in emerging female and minority developers. Similarly, banks like Citigroup and JPMorgan Chase have launched investment funds and initiatives to support entrepreneurs from underrepresented groups.
However, much remains to be done in both the public and private sectors in terms of increasing access to funding for minority-owned companies. As Ron Busby points out, to create a great Black America, we must develop a great Black economy. That all starts with great Black businesses. Experts predict significant growth in minority-owned companies in the coming years, providing an economic boost to Americans of all colors.
America’s most successful Black entrepreneurs
According to Forbes’ Billionaires List, of the 615 billionaires in the United States today, just six are Black. All six are self-made, with sources of income ranging from entertainment, to technology, to finance.
Robert F. Smith is the billionaire Black tech investor who founded Vista Equity Partners. A philanthropist, Smith settled the student debts of the entire graduating class of 2019 at Georgia’s Morehouse College. He later extended the gift to include debts incurred by students’ parents, paying off $34 million in total.
According to the Bloomberg Billionaires Index, Robert F. Smith is worth a reported $6 billion. His company, Vista Equity Partners, has been investing in software companies since 2000.
Smith graduated from Cornell, taking an executive role at Goldman Sachs before establishing his business empire, which is worth more than $46 billion today.
Another Black American billionaire, David Steward, is the chairman and cofounder of World Wide Technology, an American IT provider. The son of a mechanic, he grew up with seven brothers and sisters in the segregated South. In the early days of his career, he sometimes went without pay, and once had his car repossessed from the parking lot of his workplace.
Today, Steward’s company is worth a reported $12 billion, with customers including the federal government, Verizon, and Citi. In 2018 David Steward provided $1.3 million to the University of Missouri-St Louis to fund the creation of the David and Thelma Steward Institute for Jazz Studies. His net worth is $3.5 billion.
Oprah Winfrey comes third on the list of America’s richest Black entrepreneurs, with a reported net worth of $2.6 billion.