Diversity, Equity, and Inclusion (DEI) initiatives have become a focal point in corporate culture, aiming to create more equitable opportunities for marginalized groups. However, as the landscape of corporate governance and public opinion shifts, many companies such as Walmart and McDonald’s are scaling back or outright abandoning these DEI efforts, often citing economic constraints or political pressure. This pullback is having a disproportionately negative impact on Black women-owned businesses, exacerbating existing barriers to success and stifling their growth potential.
Just three percent of Black women can sustain their business beyond five years, according to the Harvard Business Review, compared to seven percent of white women, who start businesses at lower rates than their Black peers. Black women entrepreneurs already face numerous challenges, from limited access to capital to systemic bias in the marketplace. As DEI initiatives decrease, these obstacles are becoming more difficult to navigate.
Black women entrepreneurs represent a growing yet still underserved demographic in the business world. According to a report from GoDaddy’s Venture Forward research initiative, Black women were starting businesses at a faster rate than any other group in the United States. Despite this growth, Black women face persistent barriers that hinder their ability to scale and thrive. According to the National Women’s Business Council, Black women-owned businesses face higher loan rejection rates, lower funding amounts, and greater difficulty in accessing professional networks compared to their white counterparts.
The disparities highlighted by racial justice protesters in 2020 were key drivers of the calls for change. In response, corporations appeared to take notice, pledging $340 billion toward racial equity efforts from 2020 to 2022, according to a McKinsey analysis. But research reveals that the majority of Black women business owners did not benefit from these pledges. The support they received was short-lived, and many now find themselves in a worse financial position than they were before 2020.
DEI initiatives in the corporate world have played a vital role in creating spaces for underrepresented groups, including Black women, to receive the support they need to overcome challenges. These efforts have led to increased investment in Black women entrepreneurs, greater representation in leadership roles, and an overall more inclusive business environment. Yet as political polarization grows and economic pressures mount, many companies are scaling back or rethinking their DEI strategies, leaving Black women business owners vulnerable to the persistent inequities that DEI efforts once helped mitigate.
One of the most significant challenges for Black women entrepreneurs is access to capital. Black women receive just 0.2 percent of venture capital funding despite owning 17 percent of businesses in the U.S. When DEI initiatives were at their peak, many organizations began focusing on diversifying their investment portfolios to include businesses led by people of color, more specifically Black women. Programs, grants, and funding specifically targeting Black women entrepreneurs emerged as a way to level the playing field.
Now, as companies scale back their DEI budgets, these funding opportunities are usually the first to be cut. Many Black women entrepreneurs who relied on these targeted funding opportunities are now finding it harder to secure the financial support they need. This pullback in funding not only stifles their ability to scale but also reinforces the systemic inequalities that have always made it more difficult for them to access resources.
Corporate partnerships have been a significant avenue for growth for many Black women entrepreneurs. Through DEI programs, large corporations often set aside a portion of their procurement budgets to work with minority-owned businesses, including those led by Black women. These partnerships helped elevate smaller businesses by providing consistent contracts, access to larger markets, and brand recognition. For Black women-owned businesses, this means losing not just revenue but also networking and mentorship opportunities. With fewer partnerships available, these businesses struggle to gain visibility in a competitive marketplace.
DEI initiatives also helped to amplify the visibility of Black women-owned businesses. Companies with strong DEI commitments often highlighted minority-owned businesses in their marketing campaigns, featured them in supplier directories, and publicly supported them through social media and press releases. This kind of visibility can have a huge impact on a small business.
As DEI initiatives diminish, many Black women business owners are finding that the visibility they once enjoyed is shrinking. Major companies like such as Meta and Amazon are scaling back their “small business spotlight” campaigns, and platforms that once elevated minority entrepreneurs are diverting their attention elsewhere. This lack of visibility means fewer opportunities for growth and even less recognition in the public eye.
Mentorship and networking are especially critical in helping Black women entrepreneurs navigate the complexities of running a business. Historically, corporate DEI initiatives have provided these women with access to mentorship programs, industry-specific advice, and opportunities to connect with other successful business leaders.
However, as DEI budgets are reduced or eliminated these vital programs also get cut, leaving Black women without the guidance and support they need to succeed. Networking events and conferences designed to connect diverse entrepreneurs are also being downsized or canceled, making it harder for Black women to find the resources, advice, and community support that are essential for business growth. You can imagine the psychological and emotional toll this causes. It further diminishes the trust that Black women already have in the corporate world and, in some cases, leads to burnout. Unfortunately, the lack of a supportive environment can discourage Black women from pursuing entrepreneurship altogether.
This pullback of DEI initiatives is a dangerous trend, and it threatens to reverse so many years of progress towards racial and gender equity in the entrepreneur space. Black women entrepreneurs, who have long faced systemic barriers to success, are now being left to fend for themselves in an increasingly competitive and unequal landscape. The new presidential administration doesn’t make matters better.
If we want to continue fostering entrepreneurship and innovation for Black women, we must ensure that DEI initiatives remain a priority. This means not just making token efforts or cutting budgets when times get tough, but rather incorporating DEI into the fabric of business culture and investment strategies. It has to be sustained commitment to these efforts, ensuring Black women-owned businesses have the support, visibility, and opportunities they need to thrive.
