As one of the eleven Black female founders who successfully raised over $1 million in funding, according to a recent #ProjectDiane report conducted by Digitalundivided, it was surprising to Cheryl Contee to have recently been denied a small business loan.
So surprising in fact, the CEO at Fission Strategy and Co Founder of Attentive.ly (both reportedly successful businesses) took to social media to air out her grievances.
On her Facebook page she posted: “I just had one of the most humiliating experiences of my career. Trying to apply for a Kabbage credit line for a stable, successful, growing small biz – apparently that’s a no go if you’re Black.”
As her outrage made the rounds, other Black female small business owners, including L Joy Williams, President of the Brooklyn NAACP, piped up on her Facebook post to say they had felt the same. Williams wrote: “Interesting, I applied previously as well and thought it was just I had too many lines open or something.”
In response, Kabbage posted on their company blog: “As the leader in technology and data driven lending, Kabbage makes underwriting decisions solely based on business performance data. Demographic data is not or has never been a factor in our risk models. In fact, Kabbage does not currently collect such data.”
Since the brouhaha, Contee said she has spoken to someone at Kabbage, and while she understands the company’s policies, it didn’t change the fact that she felt like she was treated like a criminal in being made to send in a photo of herself holding up her drivers license.
The Upload followed up with Kabbage about this, to which a spokesperson replied: “As outlined in our blog post, we are committed to expanding access to capital to all small businesses. We underwrite solely based on business performance information and do not inquire about an applicant’s demographic information including race, ethnicity, or gender in our underwriting process. Kabbage’s process to determine loan eligibility is focused on evaluating business performance metrics such as revenue growth, cash flow, and other financial indicators. Applicants are approved in real-time using an automated technology platform that processes tens of thousands of applications every month. This process typically does not require manual submission of information, unless there is an exception as was the case here. Ms. Contee provided account information in her Kabbage application that conflicted with the financial accounts linked to her application. As part of our Customer Identification and Anti-Money Laundering Program, we are required to collect and verify customer information and in the case of exceptions, conduct further due diligence which is why additional information was requested of Ms. Contee. Transparency is and always has been one of our core values, and for this reason, we actively reached out to Ms. Contee to explain why our platform requires financial accounts linked to an application to be under the applicant’s name.”
Here, Contee talks with The Upload about being denied the loan as well as her experiences raising funds as a Black Woman in Silicon Valley.
EBONY.COM: Did you see the Kabbage blog post? It says you spoke with co-founder Kathryn Petralia?
Cheryl Contee: I didn’t see the blog post. I spoke with Kathryn and she seemed genuinely concerned. I think they’d like to think that I’m the only Black person that this has happened to and yet at least four other Black women were like I didn’t get a loan from Kabbage. Is Kabbage intentionally discriminating against Black and brown entrepreneurs? Probably not. Is there something in their system that’s a problem? Perhaps. They admitted they do have a problem with criminals. If Black and brown people are the fastest growing groups of entrepreneurs, treating them like criminals during customer engagement is not going to go over well.
EBONY.COM: You mentioned that your co-founder (who is not Black) applied for a Kabbage loan in the past. Was she treated the same way?
CC: She was approved more or less instantaneously. There was a very clear contrast in how she was treated in light of how I had been treated. They weren’t happy with how the process went and it took a fairly long time for them to get around to what they felt the problem was, which is something I felt they could have flagged immediately.
In terms of how they are treating customer service, I believe they recognize that could have gone smoother.
EBONY.COM: So what was the problem?
CC: For them, there were multiple people on the bank account and that was a problem for them. Subsequently, another problem was that there was already someone with a name on the accounts who had applied for a line of credit. But there are two separate businesses and I’m applying on behalf of the other business. What was really strange was that it took a really long time to get a straight answer, and I don’t feel that really happened until I raised the issue on social media. That’s sort of what made it hard for me to see it through the lens of the only difference between my business partner and myself is our ethnicity.
Now having some dialogue with them, I can’t say there was any intent to discriminate against me.
EBONY.COM: You’re an OG in Silicon Valley. Have you seen changes for people of color in being able to raise funding?
CC: We still have a long way to go but there’s definitely a lot more awareness of the challenges that Black and Brown and female entrepreneurs face. Things have moved faster among women; female founders, female venture capitalists are much better organized and active in engaging with each other. In terms of people of color, now that there are more than a handful of Black women who have been able to raise $1 Million or more shows exponential growth in the last few years.
There are funds dedicated to and focused on minority entrepreneurs or entrepreneurs creating businesses focused on underserved communities. Just betting on one type of business or entrepreneur means you’re leaving lots of money on the table. You’re being blind to the opportunity.
EBONY.COM: So what was it like for you guys back then as two women, and one of them being Black?
CC: In 2012 we started to nail down our first funding. We both had been in technology a long time but startup land is a completely different landscape. We both had built up a network and were able to start to find the right people to talk to. As a mid-career person who was used to getting emails and calls returned, it was definitely humbling that people were not always willing to meet with us. Even when they were we would hear it was a great idea but they weren’t sure we were the ones who could do it.
We had a strong idea. A working product. We had clients. A proven concept, which a lot of startups don’t have. Some startups without all of this tend to get millions of dollars in capital. I feel there are people who wouldn’t have survived this and walked away discouraged. Many may not have the connections that we had. What’s needed in the space is more focus on that initial capital. That’s the most difficult to get, but with that you can get more money in the next round.
EBONY.COM: What are your top tips for those seeking funding?
CC: Never give up. Your first investment isn’t likely to be a Venture Capital firm, it’s more likely to be an angel. So understand your ability to persevere. That’s number one. And number two would be to ask for help. In the Black community there’s a lot of fear around sharing too much of your idea lest someone steal your idea. But actually the more you share your idea and that you need help, and help others, the more others will know to connect you to others who can help you. And number three, do your research. You don’t want to go into a pitch meeting not understanding how pitch meetings work or not having the right deck. Being prepared ahead of time can make or break your opportunity to get in partnership with the right investors.
EBONY.COM: Do you think you should’ve gotten more money?
CC: It depends on the day. Another challenge for Black and brown entrepreneurs is that we don’t have a pool of wealth to fall back on. Black wealth is like six or seven cents to the white dollar in terms of what we can tap into in a crisis. Knowing not to be afraid of that is essential.
Do I think if we weren’t a female founded and female tech-led company, would we have been able to raise more? Possibly. I know White male entrepreneurs who had a lot less to start with in terms of concept and with no technology and no clients who got millions. That’s anecdotal in my experience, but the question is; should the smart money look at the changing face of America and put their money with those entrepreneurs and where the solutions are being made for those communities.
Lynne d Johnson has been writing about music since the early 1990s, tech since the late ’90s, and the intersection of technology and everything else since the early 2000s. She currently writes, teaches and consults companies on how to better engage with their audiences. Follow her on Twitter @lynneluvah.