Mark Cuban's Advice: Why Black Women Entrepreneurs Should Rethink Venture Capital

Mark Cuban recently made headlines with his advice to Black women founders: “Don’t seek venture capital.” While the sentiment may sound counterintuitive to some, especially in a world where VC funding is often seen as the gold standard for scaling businesses, there’s a deeper truth behind his words. As the founder of Brown Ribbon Exchange, a platform dedicated to empowering women entrepreneurs, particularly women of color, I understand what Cuban means and agree with much of his reasoning.

The Numbers Don’t Lie: The VC Funding Gap

Black women are among the most underfunded entrepreneurs in the U.S. According to a 2021 report from ProjectDiane, only 0.34% of all venture capital dollars went to Black women-led startups. This statistic is staggering, considering that Black women are starting businesses at the highest rates of any demographic group in the country. But despite this entrepreneurial spirit, the financial backing simply isn’t there.

Historically, venture capital funding has been skewed towards white male founders, and even when women of color do receive attention from investors, they often face systemic bias that makes securing funding even more challenging. The reality is that the traditional venture capital route may not be the right path for many women entrepreneurs, particularly those who are Black or Brown. The barriers can feel insurmountable, and the risks may outweigh the benefits—especially if you're building a business that is deeply tied to your values, culture, and community.

The Dangers of Relying on VC Funding Too Early

As Cuban suggests, seeking venture capital too early can come with strings attached—strings that often lead to giving up too much control of your business. Many founders are forced to give up equity, sacrifice their vision, or comply with timelines that don't align with their natural growth. Women entrepreneurs, especially those of color, often find themselves in situations where their ideas are diluted to fit investors’ expectations rather than their own.

I’ve personally seen how venture capital can sometimes have a detrimental impact. Too often, Black women founders encounter investors who are not only dismissive of their potential but also lack an understanding of the value these entrepreneurs bring. There's a troubling pattern of investors underestimating the market potential for businesses that focus on underserved communities, especially those run by women of color.

According to a 2020 survey by the National Women's Business Council, nearly 50% of women business owners who sought investment had a negative experience with investors. These bad experiences often lead to a lack of trust in the system and can be detrimental to the founder’s long-term vision.

Building Slowly, But With Purpose

Instead of focusing on venture capital, I encourage women entrepreneurs to focus on building their businesses slowly, methodically, and with purpose. There are alternative funding sources that align better with the entrepreneurial journeys of many women of color. Consider bootstrapping, which allows you to retain full control over your business and grow it on your terms. Bootstrapping may require creative thinking and extra effort, but it can lead to more sustainable and fulfilling growth in the long run.

Grants are another excellent source of funding. There are numerous organizations offering grants specifically for women entrepreneurs, and many are focused on supporting women of color. Pursuing these grants requires time, research, and patience, but they can provide non-dilutive capital that doesn’t require giving up ownership or control.

Debt financing, such as small business loans or lines of credit, can also be a viable option. While it may feel daunting to take on debt, it’s important to remember that debt financing is a tool to help your business grow, not a permanent anchor. The key is to understand your cash flow and ensure that you're able to service the debt without putting undue stress on your operations.

A Personal Story: Funding My Own Dreams

As someone who is building Brown Ribbon Exchange while working full-time as an accounting manager, I’ve had to get creative to fund my dreams. My full-time job supplies my needs and provides financial stability, but my side hustle—my accounting business—has been critical in funding my tech ventures. I’m in the process of bootstrapping my app for Brown Ribbon Exchange, figuring out ways to bring in extra income, and strategically saving to ensure that I don’t compromise my vision.

I’ve been fortunate enough to have access to resources like savings and flexible work arrangements, but I know that many women entrepreneurs don’t have that luxury. For them, building slowly and focusing on securing grants, starting small, and leveraging community support may be the best path forward.

The idea isn’t to give up on venture capital entirely. There may come a time when VC funding makes sense for your business—but that time isn’t always when you first start. Build your business with the mindset that you don’t have to depend on outside investors to thrive. Use your own resources, your own community, and your own vision to drive your success.

The Road Ahead

Mark Cuban’s advice is a wake-up call for many women entrepreneurs, particularly Black women, who often face barriers when seeking venture capital. While the dream of securing VC funding may be appealing, it’s important to recognize the potential pitfalls and to approach growth in a way that prioritizes your business’s long-term health and vision.

At Brown Ribbon Exchange, we are committed to providing a community and platform where women can build, collaborate, and grow without relying on venture capital. Through bartering, skill exchange, and alternative funding routes like grants and bootstrapping, we aim to support women entrepreneurs in creating sustainable businesses on their own terms.

Let’s keep building, slowly but surely. The future is bright, and it’s ours to create.