Consumers Are Buying More From Black-Owned Businesses Following Global Protests
There has also been a spike in new ventures popping up
Key insights:
- Black businesses statistically don't get as much VC funding and have instead learned to do the work without that support.
- There is worry that people will treat this like a passing fad and return to 'business as usual.'
Washington, D.C.-based attorney Khadijah Robinson spent much of 2019 preparing to launch her passion project, an ecommerce marketplace called Nile that puts “Black women and Black-owned businesses” at the forefront.
When she launched Nile in March, she never could have predicted that a pandemic would create a surge in the ecommerce sector; she definitely couldn’t have predicted that the Black Lives Matter movement in June, spurred by the police killing of George Floyd, would drive traffic to her new website. In March, Nile saw 1,600 unique visitors; in June, that number increased to 19,000.
“The growth was exponential,” Robinson said, adding that she spent much of July working 21-hour days and is considering retiring from the legal profession to run Nile full time.
The renewed awareness and protests around racial injustice had an unexpected side effect: a surge in consumer support for Black-owned businesses in every sector. Many Black-owned businesses saw a massive uptick in traffic and profits this summer, and new ventures were founded that seek to translate the momentum into long-term economic benefits for the entire African-American community.
That community-wide ethos drives 15 Percent Pledge and Consider Something Better, two ventures founded by Black women in June. When Aurora James launched 15 Percent Pledge, the fashion designer aimed to get major retailers to increase the number of Black-owned brands they stock to at least 15%. Sephora quickly signed on, followed by Rent the Runway and West Elm.
James continues to engage major retailers, hoping to sign on as many as possible to secure “financial longevity and economic equality in the long term,” she told Adweek in June.
Until now, the retailers James signed on were carrying Black-owned brands in single digits (Sephora said in June that it carried just seven out of a possible 290 in its stores). The startup level wasn’t much better; research shows that Black women founders, for example, receive roughly 0.2% of all venture capital funding.
In June, Whitney Brown and Lauren Napier established Consider Something Better, an initiative to raise capital for Black women founders. One-time donations are nice, Brown said, but in the long term “we need programs, we need policies, we need access to capital. We need the infrastructure to be able to obtain funding to grow and scale our businesses.”
But as some Black leaders learned this summer, the community itself often does the work VC funders do not. When the Issa Rae-backed data licensing firm Streamlytics introduced its first public investment campaign at the start of July, chief revenue officer Arisha Smith assumed the company would follow the traditional path of buying ads to reach investors for several months. Instead, Smith said, “we realized that we already had the tools and already knew what to do.”
Hitting the market at the peak of the protests meant that non-Black allies were also hungry to show support. Streamlytics opened to investments on the regulation crowdfunding platform StartEngine on a Tuesday and closed by Thursday morning. Streamlytics met its $1.7 million goal—the maximum allowed under SEC guidelines—in over two days.
According to Streamlytics founder and CEO Angela Benton, “99% of the investors were not from StartEngine. They were people who followed us—this was really grassroots.”
StartEngine content marketing manager Max Crawford said that only three companies have ever reached the maximum in under one week on the platform. In the second quarter of 2019, only 2.2% of investment dollars went to Black-owned businesses, compared to Q2 this year where that number more than tripled to 7.4%.
The increase in interest has been exciting, but some worry it’s temporary. Brown said she’s concerned corporations will soon go back to business as usual, “with no further involvement in our community until another innocent Black man is murdered.” She wants to see lasting commitments from the business sector.
“Until policies and infrastructure are implemented that uplift and support the traditionally marginalized and disenfranchised communities, this support is simply another headline in the news,” Brown said.
