Black Dollar Magazine


For Black entrepreneurs, creatives, decision-makers and executives

Sign up for FREE BDM newsletter

15% of Black businesses in U.S. chose fintech industry to launch startups: report

Companies like Chipper Cash, Goalsetter, Esusu Financial, and Goodr, were among the highlighted brands thriving in the sector.

15% of Black businesses in U.S. chose fintech industry to launch startups: report

The fintech industry is among the most popular sectors for Black entrepreneurs in the U.S., a report titled "The Black Tech Effect" states. It was authored by The Plug and the Omidyar Network, a California-based investment firm.

The report measured data from 100 Black tech companies in the U.S. and determined that 15 per cent of companies founded since 2013 started businesses in the industry.

“(The Black Tech Effect Report) reflects our year-long effort to dive deeper into companies paving a path toward the future, many of which are in the spotlight for the first time. We sought out solution-oriented, problem-solving companies that are tackling society’s most pressing challenges and leveraged data to bring to your attention the work and mission of founders who are defying the odds and building sustainably and purposefully.”

Companies like Chipper Cash, Goalsetter, Esusu Financial, and Goodr, were among the highlighted brands thriving in the fintech space.

The report also studied 14 other verticals, including artificial intelligence and machine learning, technology media and telecom, educational tech, health tech, SaaS, HR tech, cybersecurity, food tech, and more.

The verticals with the highest average funding/valuation included mobility tech, esports, and augmented reality, totalling US$783 million. The report also states that the verticals with the lowest average funding/valuation included audio tech, big data, and civic tech, totalling US$9.14 million.

“Understanding how to sustain funding for Black-led tech companies is necessary to expand the economy and support Black communities as a whole,” the report says. “This reality implores us to expand our definitions of success and growth for Black-led companies beyond funding. We identified industry verticals and emerging spaces where Black founders are thriving and ensured we are contributing to a Black tech ecosystem that works for all.”

Three companies chosen have achieved “unicorn status” — startups that reach $1 billion in valuation. Calendly, Chipper Cash and Esusi Financial, the two mentioned above, were ranked in that category.

Analyzing regions across the U.S., the report discovered that the Black population makes up 14.2 per cent of the U.S. total— the third-largest race group. Roughly 55 per cent of the Black population in America resides in the southern U.S.

However, most of the Black-founded companies in the report are in the west, likely due to the large tech presence in Silicon Valley and elsewhere in California. It had 32 of the 100 companies.

The northeast came in at a close second, with New York having the second highest number of companies (20), followed by Georgia (10) in the southeast. Other hotspots included Massachusetts and Texas.

From those regions, Black women-led tech companies were among the fastest-growing groups of entrepreneurs. Moreover, nearly a third of the 100 companies studied in the report were founded by Black women.

“Companies owned by women of colour soared to 43 per cent between 2014 to 2019, and Black women-led businesses climbed to an astonishing rate of 50 per cent,” the report reads. Additionally, it found that 61 per cent of Black women self-fund their startup capital.

Unfortunately, Black women founders who apply for funding have a rejection rate that is “three times higher than that of white business owners,” according to the report.

From HBCUs are where many of the founders come. The schools include: Claflin University, Florida A&M University, Hampton University, Howard University, Morehouse College, North Carolina Central University and Prairie View A&M University.

There are over 140 startups founded by HBCU alumnus, with a total valuation of nearly $953 million, the report reads. Hued, The Wealth Factory Inc. and Reyets: A Social Justice Network was among them.

Other Black entrepreneurs come from Kenya, Nigeria and Canada. You can read the full report here.