Angel investors are able to provide alternative funding solutions when access to traditional sources of capital is unavailable, and this is a common problem for minority business owners. As an angel investor, Steph Korey focuses on helping underrepresented entrepreneurs grow their businesses even when other financial investments can’t be obtained.
The Capital-Raising Challenges Minorities Face
Minority business owners often have a more difficult time raising capital than other business owners do, and this can especially be a challenge during a business’s initial phase. There are a couple of reasons why underrepresented entrepreneurs have a more difficult time.
First, the family and friends of underrepresented entrepreneurs are less likely to have substantial discretionary funds that can be used for business investments. While there certainly are exceptions, minorities tend to earn lower incomes and have fewer assets. Thus, they have less to put into businesses.
Friends and family investment is usually one of the first sources of capital that entrepreneurs tap. Since their immediate connections tend to have less to invest in, minority business owners frequently can’t leverage this source as much.
Second, some minority entrepreneurs are simply less familiar with the steps taken to obtain traditional funding. This can be a particular issue for brand-new entrepreneurs who need significant investments.
The Benefits Angel Investors Offer
Angel investors, such as Steph Korey, can help entrepreneurs overcome these challenges in multiple ways.
Angel investors often provide early funding, usually the first funding after family and friend assistance. When family and friend assistance is limited or unavailable, an early angel investment can provide the capital needed to get a business off the ground.
The terms of angel investments aren’t strict, and investors often make different arrangements with business owners. In many cases, interested investors can find arrangements that are mutually beneficial for the investor and the entrepreneur — they don’t have to adhere to predefined terms.
Some of the most knowledgeable business people are angel investors, and minority entrepreneurs can benefit from that knowledge. An angel investor who’s willing to mentor their business partner can provide guidance from inception through to a buy-out.
Most angel investors focus on specific types of business. These most often are businesses in certain industries, such as healthcare, technology, education, or hospitality. For a portion of investors, the focus also extends to causes.
Investors may partner with businesses that pursue good causes. Environmental, social and humanitarian causes are all popular.
For Steph Korey, her main focus is aiding underrepresented entrepreneurs and business owners. She frequently provides both financial resources and mentorship to the entrepreneurs that she works with.
About Steph Korey
Steph Korey is a successful entrepreneur and uses her experience to help early-stage businesses and startups. She co-founded the Away lifestyle brand and is involved with several other businesses. Korey holds an M.B.A. degree from Columbia Business School and is particularly well-versed in supply chain management.