Women of color started 64% of new women-led businesses over the last decade. They are the fastest-growing segment of American entrepreneurs by nearly every measure.

They receive less than 1% of venture capital.

That’s not a rounding error. That’s a structural failure operating at full scale while being discussed as a footnote — if it’s discussed at all. The broader conversation about women’s access to capital already moves slowly. The specific crisis facing women of color barely registers.

The overall funding gap analysis tells one story: women receive less capital across every funding category, at every stage, in nearly every industry. This piece tells the story within that story — one where the barriers don’t just add up, they multiply.

The data is stark. The policy response has been inadequate. And the women building businesses inside these compounded barriers deserve an accurate picture of what they’re actually facing.

This is that picture.

64% of New Women-Led Businesses. Less Than 1% of VC.

Start with the paradox, because it frames everything else.

Women of color — Black, Latina, Asian American, Indigenous, and multiracial women — account for 64% of all new women-owned businesses in the United States, according to American Express’s State of Women-Owned Businesses reports. They are not an emerging market. They are the dominant growth engine of women’s entrepreneurship.

Black women are the fastest-growing group of entrepreneurs in the United States. Latina-owned businesses grew 87% in the decade between 2012 and 2022. Asian American women-owned businesses have reached record revenue benchmarks. The data on WOC entrepreneurial activity is consistent across sources: women of color are building at a remarkable pace.

Now here’s the other side of that ledger.

According to PitchBook’s female founders dashboard, Black women founders received 0.34% of venture capital in recent years. Not 3.4%. Not 34%. Zero point three four percent. Latina founders barely move the needle in VC funding data — their numbers are frequently too small to appear as a distinct category in aggregate reports.

Total women-only teams captured roughly 2% of VC in the years leading up to 2024, and that number fell by half in the U.S. in 2024 alone. Women of color’s share of that already-small slice? Nearly invisible.

The paradox: Women of color are building the majority of new women-led businesses and receiving almost none of the capital that could scale them.

This is not a story about women of color lacking ambition, or failing to seek capital, or being underrepresented in business. They are everywhere in business. They are nearly absent in funding data.

That requires an explanation. The explanation is structural.

The Compounding Effect: When Gender Bias Meets Racial Bias

The instinct when describing WOC founders’ barriers is to call it “double discrimination” — facing both racial bias and gender bias simultaneously. That framing undersells it.

Biases don’t add. They multiply.

A lender who unconsciously applies gender-based scrutiny and racial bias simultaneously doesn’t create twice the barrier. The two interact in ways that reinforce each other, amplify each other, and create patterns that differ qualitatively — not just quantitatively — from what white women or men of color face alone.

The NCRC research on lending discrimination during the COVID-19 era documented this with specificity. When mystery shoppers — matched for qualifications, credit profiles, and business type — visited lenders, Black and Hispanic women-owned businesses:

The same study found that lenders spent more time explaining reasons for disqualification to Black and Hispanic women than exploring paths to qualification. The message, stated or unstated: we’re looking for reasons to say no.

This isn’t subjective experience. It’s matched-pair testing with documented, replicable results. The bias exists. It shows up consistently. And it compounds.

When lenders ask more personal questions of women of color, they’re not just being rude. They’re gathering non-financial information that can then function as a proxy for discrimination — neighborhood, family situation, “business stability” assessments that encode racial bias rather than actual financial risk.

The result is that a Black woman business owner with the same revenue, credit score, and business plan as a white male counterpart faces a meaningfully different lending experience. Not slightly different. Measurably, documentably different.

For tactical information on how to identify these patterns in real time, how to spot lending discrimination breaks down the specific warning signs and what to do about them.

The Wealth Gap Behind the Lending Gap

Here’s the foundational number that most funding conversations skip over.

Median white family wealth in the United States is approximately $285,000. Median Black family wealth is approximately $44,000. Median Hispanic family wealth is approximately $61,000. These figures come from Federal Reserve Survey of Consumer Finances data and represent a gap that has persisted — and in some periods widened — over decades.

Why does this matter for business funding? Because most business financing requires collateral. Collateral requires existing wealth. And existing wealth in America is distributed in ways that were legally engineered for much of this country’s history.

The cycle is precise:

  1. Less generational wealth — due to documented historical policies including redlining, discriminatory GI Bill implementation, exclusion from land ownership programs, and wage suppression
  2. Less collateral available for business loan applications
  3. Loan denials or worse terms — higher rates, lower amounts, more personal guarantees required
  4. Less business growth and therefore less wealth accumulation from the business
  5. Less wealth to leverage for the next stage, or to pass to the next generation

Then it repeats. Every generation of women of color entrepreneurs starts this cycle from a position that’s structurally harder to climb out of than what white founders face with equivalent talent, effort, and business acumen.

Editorial illustration of the wealth disparity behind the lending gap
The wealth gap isn’t just a statistic — it’s the structural foundation that makes every other funding barrier worse.

When a bank requires 30% collateral coverage for a loan, that requirement sounds neutral. It isn’t. A requirement designed for the median American business owner is a requirement calibrated to the wealth profile of white America — because that’s what the median has historically looked like.

A collateral requirement that sounds objective can function as a racial wealth gap in a suit.

This isn’t an accident of history that self-corrects. It requires active intervention. And in the absence of that intervention, the compounding continues.

Black Women Founders: The Numbers and the Reality

Black women are the fastest-growing group of entrepreneurs in the United States. They are also among the most underfunded.

The Wells Fargo impact research on women-owned businesses documents the economic scale of Black women-owned businesses: significant employment, measurable community economic impact, and consistent revenue growth. The entrepreneurial activity is real. The capital access is not matching it.

The venture capital data is among the most striking in any corner of the funding conversation.

Black women founders have received 0.34% of venture capital in tracked periods — a number so small it barely registers as a statistical category in most reports. Black women represent a meaningful and growing share of total entrepreneurs. They receive a fraction of a percentage point of the capital that funds growth.

The earnings impact of this compounds over a career. Research on the racial and gender wage gap suggests that Black women face nearly $980,000 in earnings losses over a 40-year career compared to white men — not because they work less or produce less, but because of structural underpayment across every stage of economic participation.

For entrepreneurs, that gap manifests as: less personal savings available to seed a business, less family wealth to draw from in the early years, less runway to survive the phase before external capital arrives, and less leverage when negotiating terms.

This is not an argument that Black women can’t build businesses. They are building them at remarkable rates. It’s an argument that they’re building them under a weight that most funding conversations don’t acknowledge — and that scale investors don’t price into their assessments.

The Black women who are building despite these barriers are not evidence that the barriers don’t exist. They’re evidence of extraordinary persistence in the face of extraordinary structural resistance.

Latina Founders: The Invisible Entrepreneurs

Latina-owned businesses grew 87% in the last decade, a growth rate that outpaced nearly every other demographic segment of American entrepreneurship.

The funding data tells a different story. Latina founders are so underrepresented in venture capital that they frequently don’t appear as a discrete category in VC investment reports. In aggregate women-of-color VC data, which is itself already fractional, Latina founders are often listed as “other” or absorbed into Hispanic/Latinx categories that don’t distinguish by gender.

Being invisible in the data has consequences. Capital flows toward categories that get tracked. Investors cite data to justify decisions. When there’s no data on Latina-founded company returns, investors fill the gap with assumption — and assumption in a system that wasn’t built for Latina founders defaults to skepticism.

The barriers layer in ways that are specific to Latina entrepreneurs:

Language in lending. Traditional lenders operate almost entirely in English, with loan documents, requirements, and application processes that create real barriers for business owners who are more fluent in Spanish. The SBA and some CDFIs provide Spanish-language materials, but mainstream bank lending remains largely inaccessible in practice for non-English-dominant business owners.

The informal economy paradox. A meaningful segment of Latina-owned businesses operate in whole or in part in cash economies — industries like domestic services, personal care, food vending, and community retail where cash transactions are standard. This creates documented revenue that doesn’t appear cleanly in bank records, making loan applications harder to build even when the business is genuinely profitable and stable.

Sector concentration. Latina-owned businesses are concentrated in industries that traditional lenders consider higher risk: food service, personal services, childcare, retail. These aren’t low-value industries. They’re industries that have been systematically undervalued by capital markets regardless of who owns them.

The combination of invisibility in VC data, structural barriers in traditional lending, and sector bias in risk assessment creates a trifecta that’s genuinely difficult to navigate alone.

What’s Actually Working

Black woman entrepreneur meeting with an advisor at a community business center
Community-based programs are moving capital to WOC founders in ways that traditional finance hasn’t.

The picture so far is accurate. It’s also not the full picture. There are funding sources, programs, and approaches that are specifically designed for women of color entrepreneurs — and some of them are moving capital in meaningful ways.

CDFIs — Community Development Financial Institutions

CDFIs are chartered specifically to serve underbanked communities, and many have explicit programs for minority women-owned businesses. They operate with less collateral sensitivity, more flexible underwriting, and staff who are trained to assess non-traditional financial profiles. The CDFI guide breaks down how to find and qualify for CDFI lending in your region.

MBDA Business Centers

The Minority Business Development Agency operates Business Centers across the country that provide direct financing assistance, business development support, and connections to capital for minority-owned businesses. These aren’t referral services. They’re hands-on technical assistance programs with staff who understand the specific barriers WOC founders face.

NMSDC Certification

National Minority Supplier Development Council certification connects minority-owned businesses to corporate supply chains and procurement contracts. Access to corporate contracts is a form of revenue security that strengthens the business profile for lending purposes — without requiring collateral or VC approval.

SBA Community Navigator Program

The SBA’s Community Navigator program places business advisors in trusted community organizations — faith institutions, HBCUs, community organizations, local nonprofits — specifically to reach entrepreneurs who aren’t finding SBA resources through traditional channels. If you’ve found government programs bureaucratically inaccessible, this program was designed to address exactly that.

WOC-Focused Funds and Investors

Several funds focus specifically on funding women of color:

Grant Strategy

Grants designed for minority women-owned businesses exist and are underapplied for. The grant strategy guide covers how to find and pursue them systematically rather than opportunistically.

Lendesca as a starting point for comparison: before walking into any lender’s office, Lendesca lets you understand what financing options exist and compare terms across multiple lenders — useful context for a population that’s frequently given worse options than comparable white-owned businesses and needs to arrive at lending conversations informed.

What Allies and Advisors Need to Understand

A significant part of HerCapital’s audience is people who advise, invest in, or work alongside women of color founders. This section is for you.

The most common error allies make is centering their own comfort over the founder’s reality.

When a Black woman founder describes experiences of bias in a pitch meeting or a loan office, the impulse to say “are you sure that’s what happened?” or “it might just be their style” is not neutral. It’s a form of doubting that the research doesn’t support. The bias is documented. Mystery shopping studies confirm it. It’s not a perception issue.

Specific things that actually help:

Fund referrals with context. If you’re an advisor, don’t just hand someone a list of lenders. Give them a lender who has a track record with WOC borrowers, tell them what to expect, and help them prepare for the bias they may encounter. Generic referrals treat structural problems as individual navigation issues.

LP advocacy. If you’re an LP in any investment fund, ask your fund managers for data on their portfolio by race and gender. Ask about their sourcing pipeline. Demand accountability in writing. LP pressure is one of the few levers that actually moves VC behavior.

Lending practice audits. If you work in financial services or are involved in lending program design, run the numbers. Look at approval rates, loan amounts, interest rates, and collateral requirements by race and gender of the applicant. The disparities NCRC found in mystery shopping show up in aggregate data too. If you don’t track it, you can’t fix it — and not tracking it is a choice.

Don’t make WOC founders educate you. The research cited in this piece is publicly available. The NCRC research on lending discrimination is free. Do your homework before you ask a Black or Latina founder to explain structural racism to you in the middle of a pitch.

This Isn’t an Addendum

The women’s funding conversation is not complete without the data on women of color. It’s not an addendum, a sidebar, or a special interest category.

Women of color are the majority of new women-led businesses. If the women’s funding movement focuses primarily on white women founders, it is not solving the problem it claims to be solving. It’s solving a smaller, more convenient version of it.

The compounded barriers described in this piece — racial bias in lending, the wealth gap behind the collateral gap, VC invisibility, language and documentation barriers — require their own analysis, their own policy responses, and their own funding infrastructure. Generic “women in business” programs don’t address them. Well-meaning allyship that doesn’t account for racial compounding doesn’t reach them.

HerCapital’s commitment is to accurate data over comfortable narratives. The overall funding gap analysis tells the broad story. This piece exists because the broad story omits the majority of the women it claims to describe.

The Funding Playbook has specific tactical resources for WOC founders navigating lending, grants, and alternative capital. The Data section will continue adding research specific to women of color as new studies become available.

The system benefits from the data being siloed, the problem being underquantified, and the conversation being fragmented. The way to fight that is to put the numbers in the same place, connect them to the structural explanation, and refuse to treat the most affected segment of women entrepreneurs as a footnote.

64% of new women-led businesses.

Less than 1% of the capital.

That’s the gap inside the gap. And it’s not closing on its own.