Championing BIPOC founders in retail

On the first day of NRF 2022: Retail’s Big Show, the conversation turned toward the topic of diversity and how funding for BIPOC businesses (Black, Indigenous, and people of color-owned) in the retail industry continues to lag. The panel was moderated by Diana Melencio, partner, XRC Labs; joining her were Regina Gwynn, co-founder, Black Women Talk Tech, and Jihan Thompson, CEO, Swivel Beauty.

All three of these companies have close ties with the retail industry. XRC Labs is an accelerator and venture fund focused on retail and consumer goods. Black Women Talk Tech is a cohort of Black women entrepreneurs focused on building billion-dollar businesses. Swivel Beauty is a platform composed of the largest network of beauty professionals that work with textured hair.

Melencio began the conversation by asking Thompson to describe the challenges she had encountered working with enterprise companies and retailers.

“A lot of them weren’t what you’d expect,” Thompson said. “You’re still scaling up business, so conversations with retailers and brands can be hard, because they might not be able to find you. But a lot of retailers and brands really want to tap into our network, and now they’re coming to us. The people in our network — the stylists — are thought leaders. They know what products clients are using, what the frustrations are, and what actually works. Brands and retailers value that.”

When asked about the state of equity investment in the companies she works with, Gwynn said, “There continues to be a lack of funding for Black and brown founders, particularly of business-to-consumer companies, because there’s an expectation that you’re using revenue to fund your business.” Conventional product purchase terms — payment in 30 or 60 or 90 or 120 days — may not work if you need the money up front.

Though access to capital has never been higher, “it’s not trickling down to Black and brown founders,” Melencio said.

Gwynn suggested one reason is that many BIPOC companies are still in a fairly early stage. “Only now are you seeing examples of, say, a $3 billion company,” she said. “You have to see founders reach A, B and C levels before funders realize these companies can actually grow. There needs to be more funding opportunity and flexibility up front, so that you can see examples of companies launched, founded, and led by people of color.”

“I agree completely,” Thompson said. “Access to capital at an early stage is fundamental to building a team, having the right strategy, and being able to try things and make mistakes.”

Capital aside, Melencio noted some retailers have programs in place to encourage and support BIPOC suppliers. 

Thompson said Swivel was part of the Sephora Accelerate Program. “It was always how can we help you grow the brand? We’re tech, so we worked with their tech team and were able to tap into a lot of expertise,” she said. The Sephora program, she noted, has now switched to focus exclusively on BIPOC founders providing products they can put on their shelves. “That is walking the walk,” she said.

“Suppose you’re an investor. How do you find these BIPOC companies?” Melencio asked.

“You have to have a purposeful focus in finding BIPOC founders,” Gwynn said. “They won’t come through your regular network, so you have to make sure you’re open to the networks they do come through.”

And suppose you’re a retailer looking for a product? Do you somehow redefine the starting line?

“Yes and no,” Gwynn said. “Don’t bend the rules to accommodate a diverse founder. There is significant opportunity in funding BIPOC founders. This is not a feel-good. This is not a goodwill effort. This is building out an untapped market that you can see outsized economic gains from. But it is going to take a different set of resources to get them there.”