Introduction: The financing challenge of underrepresented founders? 

There are many different ways to secure funding to start a business, including crowdfunding, small business loans,  and of course, venture capital (VC) investors. This last source, VC investors, is one of the most sought-after by founders. These private equity investors provide financing for startups and small businesses that they believe to have long-term growth potential. 

It goes without saying that obtaining venture capital funding can be quite difficult, as VCs are extremely selective. To make matters worse, underrepresented founders face additional hurdles. Women, people of color, and founders from diverse backgrounds are often overlooked, thanks to a lack of diversity and inclusion among investors and decision-makers. 

A recent report by McKinsey & Company showed that Black and Latino founders received only 1 percent and 1.5 percent, respectively of total US VC funding in 2022. Additionally, women-founded companies received just 1.9 percent of VC funds, and of those funds, only 0.1 percent went to Black and Latino women founders. 

Other challenges that underrepresented founders may face when seeking funding include investor bias, less exposure to investor networks, and a lack of representation from the VC industry. 

In a world where obtaining capital to start or grow your business is incredibly challenging, founders need to find other reliable and more accessible sources. One such source is business grants.

Private or government grants for underrepresented founders and entrepreneurs?

Entrepreneurship is not an easy path for anyone, but thankfully there are government grants and small business loans designed for those who need funding, including underrepresented founders. 

The U.S. Small Business Administration (SBA) helps small businesses get the funding they need through SBA-backed loans. This type of loan reduces risk and provides easier access to capital. 

There are also a variety of grants available for entrepreneurs. Federal and state agencies, as well as private companies, offer small-business grants. Grants.gov provides a database of government small-business grants managed by federal agencies. Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) are federal grant programs that fund startups and small businesses focused on technological innovation and scientific research. 

How to apply for a startup or small business grant

So, you’re ready to apply for a grant. A great starting point is to research small business grant opportunities specific to your industry and location. When reviewing available grants, you’ll want first to ensure that your company meets the eligibility requirements. Additionally, be mindful of deadlines and specific application requirements, such as including a business plan and Employer Identification Number (EIN). 

Once you’ve determined which grant(s) you’d like to apply for, the next step is to write a grant proposal. In doing so, it’s important to be clear and concise so that your application can be easily understood. The following are some best practices for crafting a top-notch application:

• Research your audience and prepare your business plan
• Write a cover letter and executive summary that introduces your business 
• Explain the problem you’re trying to solve in the market and include a project description detailing how you’ll address that problem
• Highlight your company’s impact, vision, mission, and financial potential 
• Discuss why you’re seeking funds and how you will use the grant money 

Resources for founders seeking grants

If you need additional support while seeking funding, there are many resources available for founders seeking grants. 

Start with your professional network on LinkedIn and any small business owners you know. You may find other entrepreneurs and startups willing to share their business and proposal templates with you. 

Mentorship can also be quite powerful for small business owners. Consider attending local networking events designed for startup organizations, as these are great places to find a mentor who can help guide you through the process. 

Top startup grants for underrepresented founders

As previously mentioned, lack of access to capital, limited access to investors, and bias within the VC industry are just a few of the many challenges that underrepresented groups face in securing funding.

But don’t let this discourage you. Many founders have successfully grown their businesses through grants. For example, Kat Weaver won a whopping 22 grants to fund her e-commerce business, Locker Lifestyle. Her success led her to found Power to Pitch, and she now helps other founders develop their pitches. 

The following are among the top startup grants designed specifically for underrepresented founders:

Grants for Black Founders

Black Girl Ventures Grant Program provides underrepresented woman-identifying founders with access to the community and capital they need to grow their businesses. To date, the program has funded 450 women of color and served 10,000 founders. 

Grants for Indigenous Founders

NDN Collective Loan Fund helps empower Indigenous communities through philanthropy and impact investing. The fund’s programming consists of grantmaking, low-interest investments, community organizing, and more.

Native Community Development Financial Institutions (CDFIs) is a program designed to provide all people and communities access to investment capital. The fund’s mission is to increase economic opportunities for underserved people. 

The Changemaker Fellowship by the First Nations Development Institute works through three core strategies to shift power: defend and protect Indigenous people, develop communities sustainably, and decolonize by revitalizing Indigenous ceremonies. 

Grants for Hispanic Founders

Latino Entrepreneurship Fund invests in Latino-led nonprofits and grassroots organizations working to make an impact on social change.

Grants for AAPI Founders

Project Rebuild | AABDC helps minority small businesses with technical support, access to capital, digital marketing, and other needed resources. Part of their mission is to support Asian-American-owned businesses by promoting them nationally across social media accounts. 

Grants for Immigrants

Refugee Microenterprise Development | The Administration for Children and Families (MED) is a program that promotes the economic integration of eligible refugees by providing loans, training, and technical assistance to start and grow small businesses. 

Grants for Women Founders

Cartier Women's Initiative Award is an international entrepreneurship program that empowers women-owned businesses with a strong, sustainable impact. 

The Amber Grant for Women in Business by WomensNet was founded to honor the memory of Amber Wigdahl, who died at the age of 19 before realizing her business dreams. Their grant money is designated for startup grants, business grants, and grants for LGBTQIA+ founders.

Grants for LGBTQIA+ Founders

The Pride Grant is a national LGBTQIA+ grant that provides small businesses the chance to receive a $25,000 grant package. 

Grants for Founders With Disabilities

The Center for Grantmaking by the Kessler Foundation focuses on grant programs that help create employment opportunities and improve the quality of life for individuals with disabilities. 

Ways to make your business grant application stand out

With so many startups and small businesses seeking grant funding, how can you make your application stand out? The following are five strategies that can help:

• Align values: Ensure that the foundation’s goals align with the type of work your organization does. You may also want to contact a program officer to confirm that it’s a good fit. 

• Research the funding organization: Find out who they are funding and how much money they are donating to ensure that your request matches up. 

• Develop a strong impact statement: This is your opportunity to share why your organization’s work is important and why their support is needed. 

• Set achievable goals: When sharing your goals, be sure to create attainable targets. 

• Incorporate data that quantifies your needs: When asked how you plan to use the grant money, include specific data that measures your impact. 

Most importantly, remember that you are telling a story. Storytelling is a key element when writing grant applications because a strong story will engage the reader and create an emotional response. Share what makes your startup or small business unique and what sets you apart. Your story should not only communicate your goals, but also highlight your passion, mission, and impact.  

In closing

No matter what your background, or how limited your accessibility, there are always ways to find and secure funding for your startup or small business. Don’t be afraid to reach out to others who have walked in your shoes, as mentorship can be of great value—especially when navigating the challenges of starting a business.