Most people wonder if the growth of technology has peaked or if there is still more to come. The tech industry is clearly in for a seismic shift, with demand for tech-related goods and services potentially tripling over the next decade. This alone has aided blacks’ entry into the market, resulting in a cultural shift and a shift in how technology, in general, is viewed.
True, black people were under-represented in tech jobs in the past. The issue, however, was not in Silicon Valley but from the low number of applicants. Black tech has been steadily increasing for a long time, but the post-pandemic surge has significantly increased numbers. This has been attributed to a shift in values and a general acceptance of technology as the way of the future. In addition, the willingness of Silicon Valley investors to invest has attracted talent to the field.
Here are some of the reasons why black tech is on the rise.
Increased capital Interventions
In the past, the lack of capital, financial knowledge, and business model support made many black tech entrepreneurs less economically mobile and limited their potential to grow. Interventions to accelerate the growth of technology by public, private, and social sector stakeholders have transformed the niche into a more sustainable ecosystem that is more supportive of black tech entrepreneurs. Local economic development organizations, community development financial institutions, chambers of commerce, and other government agencies are already involved in these activities. They have gone a long way to make it easier for tech startups with ingenious ideas to grow.
Allow for more equitable access to capital.
To overcome economic barriers, black tech businesses require direct investment or in-kind equity contributions, such as grants, subsidies, loans, and revenue-participation agreements. During the COVID-19 crisis, direct investment was especially important, and luckily, it came through for many black-owned tech startups.
The boom of Web3, virtual/augmented reality, and cryptocurrency
We have seen significant progress in all of these related but distinct fields. VR and AR have transformed the computing experience by providing new ways to interact with technology and with one another. These technologies are still in their infancy, but they have served to create new jobs and levels of innovation in the computing experience. Tech startups now have more alternatives to growing their business than they had in the past. It is now easier to scale a business model than it was in the past to get proposals and ideas past the talking stage.
The requirements for scale are easier to sort out. It is relatively simpler to start a business, especially given the popularity of entrepreneurship as a viable and legitimate career goal among black tech entrepreneurs. The challenge for black-owned businesses to achieve the scale required to compete for government contracts or do business with large multinational corporations is more trifling now.
Implementation of policies that produce equitable outcomes
Institutional barriers for black-owned tech businesses are being removed by the public, private, and social sectors. Stakeholders are working to ensure that laws, policies, and practices are designed to create equal opportunities and outcomes for all. Policymakers, industry groups, affinity groups, and stakeholder coalitions enforce laws and policies to prevent inequitable processes and outcomes.
Furthermore, procurement practices have evolved to include more of their businesses, particularly at anchor institutions and large organizations. This work was especially important during the pandemic-related economic crisis, and organizations with a stake in keeping business ecosystems alive were able to lead the charge.
Increase in investments in the sector
The private sector’s strategic partnerships with local tech startups have led to the introduction of cutting-edge digital technologies business models that benefit the firm, the startup enterprise, and consumers. Financial incentives for investors and large national companies to nurture and collaborate with fledgling startups have developed innovation hubs that attract foreign investment and enough talent to the sector.
The rapid acceleration of investment capital has assisted black tech startups in innovating. Despite the fragmented effects of the global health crisis, tech startups on the continent are viewed as top investment draws. Furthermore, the private and social sectors assist black-owned businesses in developing capabilities and facilitating knowledge sharing.
Why is there an increase in investment by large organizations?
Financing is more accessible now than ever for tech startups. Despite the progress made by black tech entrepreneurs over the last two decades, few had been able to gain access to equity, angel investor, and venture capital communities that have fueled investment in the innovative new companies and industries that are currently fueling our economy, particularly in the technology sector. An increasing number of initiatives are now aimed at better preparing black entrepreneurs to build relationships within those communities and attract investments.
Increase the number of mentorship and sponsorship opportunities
The overall representation and participation in tech activities, networking, mentoring, and sponsorship programs have grown in the last decade, assisting Black entrepreneurs in overcoming socio-cultural barriers. Black tech entrepreneurs at all levels are consciously developing and sponsoring more Blacks’ careers in the field.
Many community programs have been organized with the aim of assisting black entrepreneurs and budding techies in connecting with role models and commercial networks, which can help Black prospective entrepreneurs pursue business ownership with greater confidence and support. The private and social sectors are constantly facilitating partnerships between established businesses and compatible start-ups.
One major way they have managed to do this is through entrepreneurial training.
Once upon a time, tough individualism, tenacity, and subject matter expertise were sufficient to launch and grow a significant business. Today’s African-American business owners must be students and, eventually, masters of entrepreneurship, which includes developing a capacity for raising capital, financial management, strategic planning, brand positioning, mergers and acquisitions.
The popularity of entrepreneurial training has aided their ability to acquire all the skills needed to be major players in the field. Expanded mentorship and sponsorship opportunities also strengthen bonds between Black entrepreneurs and other stakeholders in business ecosystems.
Gen-Z’s interest in technology
Large institutions are becoming aware of this generation’s innovative nature and have stepped in. There has been a noticeable increase in venture capital funding, with Fintech startups receiving the largest portion of the cake. Since 2015, there has been an increase in funding for black American and African startups from global investors, with the number of US startup financing deals worth over $200 million having increased by more than 800%.
The growth of these tech startups has continued to rise, owing primarily to the large youth population and rising internet access. Startups in technology seek to innovate and develop solutions that improve access to healthcare, education, financial services, agricultural support, trading, logistics, and so on.
Speculation and hope for the future
Given its large youth population, increasing smartphone adoption, and internet connectivity rates, there is reason to be optimistic about the market’s future as a major tech market. Furthermore, the vast pool of potential demand waiting to be channeled into this ecosystem continues to strengthen investors’ confidence in the various tech startups platforms sprouting up.
Government intervention has been increased
The government has increased its support for black tech startups in the last year. The creation of beneficial grants and an improvement in the regulatory environment have made this niche welcoming to all players, which as in turn resulted in the development of an ecosystem for black tech startups and venture capitalists. Supply chain disruptions in the Covid era have pushed venture capitalists to invest in industrial tech start-ups that provide solutions. So far this year, industrial start-ups have raised a record $45.1 billion, compared to $34 billion raised in all of 2020.
It is a win-win situation when the government assists small businesses in starting and growing. Local businesses contribute to the tax base through business taxes and wages paid to employees. The prospect of the increased workforce and economic growth motivates municipalities, counties, states, and the federal government to provide various forms of assistance, such as grants, research opportunities, beneficial legislation, and worker training programs.
Loan Guarantee Schemes
Government agencies, such as the U.S. SBA, offer loan guarantees to small businesses and encourage local banks to work with start-ups and established businesses looking to expand. Additional loan opportunities for black people have been extremely beneficial for their businesses. Previously, the lack of PPP loans to Black businesses exposed banks’ failure to cultivate relationships with the Black community.
Funding Development and Research
The federal government provides grants to institutions and businesses working to develop new technologies that will benefit the industry, ensuring that the technologies are shared with the industry. In some cases, the government will provide grants to private companies that develop a new product or service that will improve a critical sector of the economy, such as transportation, energy, agriculture, or communications. Some states also fund R&D projects and collaborate with private investors and the federal government to raise funds.
Other notable reasons black tech is on the rise include:
Competitiveness at a high level amongst players
The last decade has seen exponential growth in the number of these tech entrepreneurs, which has resulted in a high level of competition among the players. Because competing in the digital space does not necessitate profound scientific expertise or large capital investments, these nimble innovators can easily tap into the vast pool of talents and available digital knowledge to create novel products, services, and business models.
Improve business capabilities and knowledge sharing
Black tech startups require support to develop capabilities and share more experience and understanding to overcome market barriers. These capability-building efforts can be led by black service providers compensated by organizations that support entrepreneurship equity. This has protected and strengthened existing Black-owned businesses while also creating strong business networks.
Improvement of Businesses Through Software Development
Smart software has proven to propel businesses to new heights. And, like the software developers who helped those entrepreneurs launch their big ideas, today’s software development companies are on the lookout for the next breakthrough in smart software and beyond to help turn startups into the next trillion-dollar projects.
Wireless innovation and collaboration among technology players
A major push to build out broadband wireless networks has provided the underlying infrastructure required for communications innovation, bridging the gap between the market and solution developers. Collaborations between tech players have increased. It has taken the form of revenue-sharing alliances, joint ventures, or technological alliances that have seen the growth of the niche.
The general adoption of Hubs for black Tech SMBs
To make Black tech SMBs better, the private and social sectors—particularly anchor institutions—have provided resources, such as assistance with re-skilling and up-skilling workers in Black-owned businesses. For example, a major social-media platform created a resource hub to provide businesses with industry-specific information.
On-the-job training and free web-based courses, likewise, are resources that can be easily shared across multiple businesses. By facilitating digital transformations, business-services providers have assisted black tech businesses in identifying new market opportunities.
Finally, digital capabilities have increased the number of opportunities available to Black entrepreneurs, and their corresponding business needs that were once unmet are now being realized. Many Black-owned businesses in the past lacked the resources to hire service providers to assist them in digitizing their operations. Free or subsidized installation, technical support, and staff training are now available to assist Black tech businesses in acquiring more digital capabilities and becoming more capable of sharing this knowledge with other Black-owned businesses in their communities.