Black communities saw a surge in entrepreneurship during the pandemic as an increased number of people turned their efforts toward startups amid increased unemployment rates and economic uncertainty.
According to data from the Kauffman Foundation, 380 out of every 100,000 Black adults became new business owners during the 2020 pandemic, up from 240 in each of the prior two years.
The data mirrors findings from a recent study by the National Bureau of Economic Research, which found that Black Americans were more likely to become entrepreneurs during the pandemic and that new businesses were disproportionately located in Black neighborhoods.
Black Americans were also hit harder during the pandemic in terms of both loss of life and income. While 20 percent of all U.S. businesses closed when the pandemic struck, that figure was 40 percent for Black-owned firms. According to an author of the Kauffman report, the number of businesses that opened during the surge likely included some businesses that were reopening as the pandemic waned.
According to Jorge Guzman, assistant professor of management at Columbia University and a co-author of the National Bureau of Economic Research study, another reason for the surge could be that Americans have a better understanding of racial inequality.
“There’s been clear intent in banks and government, etc., to make sure all the financial support throughout this year reaches Black neighborhoods,” Guzman said.
Last year, amid the nation’s racial reckoning, The Associated Press reported that Google searches for “Black-owned businesses near me” reached an all-time high.
“It’s great seeing people realize that where they shop can be another form of activism, that it’s a way to put your money where your mouth is,” said Randy Williams, founder of Talley & Twine, a Black-owned watch company in Portsmouth, Virginia.
After George Floyd’s death, major banks promised record amounts of money to Black-owned and minority businesses and corporations.
Many of the businesses started during the pandemic were “necessity startups” intended to help people survive layoffs and reductions in income. These businesses typically have higher failure rates than “opportunity startups.” However, for some Black Americans, the pandemic presented a new opportunity.
Everett Sands, chief executive of Brea-based Lendistry, said he’s seen a surge in the number of inquiries from Black people interested in starting businesses.
“They had a moment of pause induced by the pandemic,” he told the Los Angeles Times. They thought, “Let me try something else.”