Black history month

Texas named second-best state for black entrepreneurs

Texas was ranked among the top states for black entrepreneurs. Getty Images

In honor of Black History Month, a study was conducted to see which states have the best environment for black entrepreneurs — and Texas rose to the top.

The Lone Star State was ranked No. 2 in the inaugural FitSmallBusiness study, only behind Georgia. Florida, California, and North Carolina rounded out the top five, in that order. The ranking factored in metrics such as start-up growth, cost-of-living, black business success, and social equality.

"Entrepreneurship is the backbone of the American economy and minority-owned businesses are no exception to that fact," says FitSmallBusiness's special projects editor, Michael De Medeiros, in the news release. "With this being the inaugural study, our goal was to focus on the data that paints an overall picture of what the African American entrepreneur faces in the business world."

Breaking down the metrics for the state, Texas ranked No. 4 for three metrics —black business success, startup climate and financial health. However, when it came to social and financial equality — which factored in education, health, mortality rate, etc. — the state ranked No. 17.

The study used reputable reports from the United States Census Bureau, WalletHub, U.S. News & World Report, and more. From these reports, the study found that black-owned firms have grown 34 percent from 2007 to 2012, to now over 2.6 million companies. The top 100 black-owned companies generated $30 billion in 2018, but only 1 percent of venture-backed startup founders were black.

In addition to these metrics, the study also polled over 1,300 U.S. citizens regarding their own experience with black entrepreneurship. When asked about opportunities for black entrepreneurs compared to recent history, over 21 percent of respondents said it was about the same; however, more than half responded that there were somewhat or much more opportunities than before.

"While we weren't surprised by certain findings, some of the state rankings told an interesting story of the unique journeys that African American entrepreneurs have to traverse," De Medeiros continues in the release. "Ultimately, we hope that our continuing work to identify the best states for minority entrepreneurship will lead to new businesses outside of just the most prosperous areas of the U.S."

Austin-based Capital Factory — a startup development and investment organization — in partnership with DivInc, has launched its second annual startup pitch competition for black founders. The application is live now, and the deadline is March 20. Five startups will be invited to pitch on April 14th at Capital Factory's Black in Tech Summit, and one will walk away with a $100,000 investment.

Trending News

Building Houston

 
 

Cloudbreak Enterprises is getting in on the ground level with software startups — quickly helping them take an idea to market. Photo via Getty Images

Lauren Bahorich is in the business of supporting businesses. In February 2020, she launched Cloudbreak Enterprises — B-to-B SaaS-focused, early-stage venture studio — with plans to onboard, invest in, and support around three new scalable companies a year. And, despite launching right ahead of a global pandemic, that's exactly what she did.

Bahorich, who previously worked at Golden Section Ventures, wanted to branch off on her own to create a venture studio to get in on the ground level of startups — to be a co-founder to entrepreneurs and provide a slew of in-house resources and support from development and sales to marketing and administration.

"We start at zero with just an idea, and we partner with out co-founders to build the idea they have and the domain expertise and the industry connections to take that idea and built a product and a company," Bahorich says.

Bahorich adds that there aren't a lot of venture studios in the United States — especially in Houston. While people might be more familiar with the incubator or accelerator-style of support for startups, the venture studio set up is much more intimate.

"We truly see ourselves as co-founders, so our deals are structured with co-founder equity," Bahorich says, explaining that Cloudbreak is closer to a zero-stage venture capital fund than to any incubator. "We are equally as incentivized as our co-founders to de-risk this riskiest stage of startups because we are so heavily invested and involved with our companies."

Cloudbreak now has three portfolio companies, and is looking to onboard another three more throughout the rest of the year. Bahorich runs a team of 15 professionals, all focused on supporting the portfolio. While creating the studio amid the chaos of 2020 wasn't the plan, there were some silver linings including being able to start with part-time developers and transition them to full-time employees as the companies grew.

"Within the first month, we were in shutdown here in Houston," Bahorich says. "But it's been a great opportunity for us. Where a lot of companies were pivoting and reassessing, we were actually able to grow because we were just starting at zero ourselves."

Cloudbreak's inaugural companies are in various stages and industries, but the first company to be onboarded a year ago — Relay Construction Solutions, a bid leveling software for the construction industry — joined the venture studio as just an idea and is already close to first revenue and potentially new investors. Cloudgate is also creating a commercial real estate data management software and an offshore logistics platform. All three fall into a SaaS sweet spot that Bahorich hopes to continue to grow.

"We are looking to replace legacy workflows that are still performed in Excel or by email or phone," Bahorich says. "It's amazing how many opportunities there are that fit into that bucket — these high-dollar, error-prone workflows that are still done like it's 1985."

Given the hands-on support, Bahorich assumed she'd attract mostly first-time entrepreneurs who don't have experience with all the steps needed to launch the business. However, she says she's gotten interest from serial entrepreneurs who recognized how valuable the in-house support can be for expediting the early-stage startup process.

"What I'm realizing is a selling point is our in-house expertise. These founders are looking for technical co-founders," Bahorich says. "We can both provide that role and be capital partners."

Trending News