23% of Black Web 2.0 Start-ups Operating with Revenue, Surpass National Average

A few weeks back, ChubbyBrain and their parent company CB Insights invited Black Web 2.0 readers to try out the beta version Funding Recommendation Engine (FRE), it’s latest product. FRE allowed users to search for potential investors using an algorithm based on the amount of funding required by the entrepreneur, location and experience as well as the potential investor’s past funding experience. A number of our readers took FRE for a spin allowing ChubbyBrain, to gather some rather intriguing data on the makeup of our audience, especially when it comes to entrepreneurship.

Unlike the data compiled by ChubbyBrains’ Human Capital Venture Capital report, listing California, Massachusetts, and New York as the top locations for start-up founders many Black Web 2.0 start-up founders are located in areas not typically associated with technology start-ups.  New York and North Carolina led the pack with 22%. Georgia and Florida came in second with 14% while New Jersey, Southern California, Illinois, and Maryland clocked in with 7% each.  Over the last 3 years and after talking to countless entrepreneurs we’ve noticed that most are located on the east coast with a specific concentration in the Mid-Atlantic region. Reason could be attributed to the higher concentration of African-Americans in that area as well as the community that exists their for entrepreneurs.  While there is no Silicon Valley like hub the Mid-Atlantic region has served a similar function, fulfilling a few key elements to the type of life-cycle that is needed; mainly mentorship and fostering community.

What we thought to be most interesting from the report was the number of start-ups that were past the idea/concept stage and already operating with revenue.  Black Web 2.0 entrepreneurs are above the national curve with 23% operating with revenue in comparison to the national average of 17%.

This data makes total sense when you look at the number of start-ups that have received outside funding.  Eighty-eight percent of Black Web 2.0 start-ups have received no funding from venture capitalist, angel investors, or government grant programs. This is much higher than the national average of 63% of start-ups having not received any outside funding.  What stands out to us is the lack of funding but also the increase (in comparison to the national average) of start-ups that are operating with revenue.  Black Web 2.0 start-ups are largely bootstrapped but see revenue quicker.  In summary there is less of a cushion of “other peoples money” and more urgency placed on building a real business that makes real money, a guideline many start-ups should follow.

So what area’s of the tech industry are Black Web entrepreneurs launching companies in? Forty-seven percent of our entrepreneurs have start-ups in the Internet industry (no surprise), which is only slightly lower than the national average at 49 percent. However, 29% of Black Web 2.0 entrepreneurs are in the mobile and communications industry (including mobile apps and services). Considering African-American’s are the most active users of the mobile web and outpace White’s in mobile application usage it’s nice to see that our entrepreneurs are starting to take action and are creating on mobile platforms and not just consuming.  In the the next 3-5 years we think this data will flip-flop with entrepreneurs in the mobile communications sector leading the way.

Other interesting aspects of the report included industry experience and entrepreneur education level. Following the trends in the Human Capital Venture Capital report, experience is king. ChubbyBrain’s aggregate stats show that nationally 67% of entrepreneurs had over 10+ years experience while 53% Black Web 2.0 entrepreneurs have 10+ years of experience. According to the report:

  • 42% of Black Web 2.0 entrepreneurs have 6-10 years of experience while 29% of entrepreneurs have 16-25 years of experience. Entrepreneurs with over 35 years of experience and one year of experience were tied with 6%.
  • Black Web entrepreneurs are extremely educated with 47% of holding bachelor’s degree and 41% of readers holding their Master’s degree, this was an exact mirror of the national average of 88% entrepreneurs having at least a bachelor’s degree.

All very interesting stuff.  Take a look at ChubbyBrain’s full report on Black Web 2.0 entrepreneurs, Black Web Startup Entreprenuers – Highly Educated, Operating with Revenue and Mostly Unfunded, for a closer look.



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