While there has been considerable effort made to make the workplace a more equal place, a recent study from Columbia Business School highlights the work still needed to ensure equality for Black and Latino minorities.

The study finds significant disparities not only in terms of pay but also in the likelihood that one might start a business. The researchers reveal that Black entrepreneurs make up just 1-10% of new business creators, with Latinos accounting for just 2.4%. It’s a situation that will only change if those who make the investment decisions change.

Fairer investment

The research gathered a few decades worth of data from a number of VC databases, as well as data on crowdfunding via SEEDRS. The authors were not only interested in identifying disparities in entrepreneurship but also in the makeup of investors in startups. They found that just over 11% of minority startups receive outside investment, with biases among these investors meaning that funding often goes to entrepreneurs of the same gender and/or race as them.

The situation is scarcely any better in terms of more traditional funding, such as via bank loans, as Black entrepreneurs were 50% less likely to get a bank loan than white entrepreneurs. Sadly, crowdfunding does no better, with white men the most likely to receive investment.

The authors believe that the best remedy would be to increase diversity at the funding level, with more investment firms led by minorities and women. What’s more, these investors should also be put into a position to invest in their own communities.