While the COVID-19 pandemic was nothing if not devastating, there is one good thing to come out of it: the rise of Black-owned startups.
According to a new report by the Kauffman Foundation and reported by the Los Angeles Times, 2020 saw a record number of Black-led businesses opening up. More Black-owned startups came to the forefront in 2020 than in any other time over the past 25 years.
“On average 380 out of every 100,000 Black adults became new entrepreneurs during the 2020 pandemic, up from 240 in each of the prior two years,” reported the Times.
But while that number seems to be promising, the reality of those numbers paints quite a different picture. For one, the reason more Black men and women started their own businesses than any other ethnic group is because Black men and women were hardest hit by unemployment when the pandemic started. And with things being as difficult as they were in terms of unemployment benefits, many leaders of Black-owned startups thought it would just be easier to start their own business than to jump through hoops to get their benefits.
Second, and perhaps most saliently, not all of these Black-owned startups survived in the post-COVID world. Almost 40 percent of all these Black-led businesses are now closed, compared to 20 percent of all businesses nationwide.
“Many of the Black-owned businesses that formed last year were what are called “necessity” startups — that is, firms that people started to survive a layoff, or a cut in hours or income,” reported the Times. “And such necessity enterprises tend to have higher failure rates than “opportunity” startups, which are more common during good economic times.”
With that said, if there’s nothing else that comes from the pandemic, it’s the knowledge that Black men and women can — and should — always aspire to do better than their current circumstances.