Houston may like to describe itself as a city where professionals with a great idea and hustle can make it. For Black entrepreneurs, the data suggest that the promise is only partially being kept.
The number of Black-owned firms in the region keeps climbing, but revenue and access to capital are not climbing anywhere near as fast. Contracts and access to capital also remain as central obstacles.
Business owners describe these challenges as less of individual walls and more as a culmination of factors, depending on where a business is in its life cycle.
Challenges and how to overcome them
Margo Jordan, founder and CEO of the pediatric behavioral health platform Enrichly, described the venture capital side of the equation. She raised over $2 million from VCs and angel investors, like the American Heart Association, BIP Ventures, Catalyst by Wellstar, Florida Funders, Google, Nex Cubed, HBCU Founders, Techstars, and the Global Good Fund. Black women tech entrepreneurs like Jordan have long faced barriers to capital access. Studies show that only about 4% of venture capital funding goes to all-women teams. Less than 1% goes to Black women.
“It impacts your mental health because you’re wondering if there’s something wrong with you,” Jordan said. “But no, there’s really just something wrong with the system and the lack of access to capital that Black founders, Black women founders continue to receive.”
The funds are necessary to test out myriad attempts at scaling, Jordan has observed.
“The most difficult part about scaling is not having an adequate amount of funding to test things out, to test whether or not you should go into a market or not,” Jordan said. “You have to scale slowly. You don’t have a lot of chances to like start and fail.”
Jordan is no stranger to such failure. After a brick-and-mortar business defaulted on a Small Business Administration loan during COVID, she pivoted into ed-tech and then health-tech, eventually raising about $2 million in venture funding.
“By the time we got our feet underneath us, the loan had defaulted so bad that they added like an additional $100,000 on to what we already owed,” she added. “That itself made it even more difficult for me to start from scratch again and access that type of capital.”
In response to a lack of capital and access to funding opportunities, the community is resorting to circulating funds within the community, which involves spending more at Black businesses.
This, in turn, helps build a foundation for those who follow.
“We wanna circulate our dollars in our community,” Frank Perkins II, CEO and co-founder of Black Wall Street, said. “Not only does it help the business owner, but it helps the infrastructure, provides tools and knowledge for our kids that are going up behind us, and provides jobs.”
Perkins also traces his mission to providing more contracts to minority vendors, otherwise missing from traditional chambers of commerce.
What to do, what not to do
In Houston, contracting also poses challenges for Black business owners. But there is not one obstacle, but several interconnected ones.
“Access to capital is important, but capital alone doesn’t create a scalable business,” said Brandon Davis, MBE Services director at the Houston Minority Supplier Development Council. “Companies also need a strong customer pipeline, significant contracting opportunities, the operational capacity to perform larger contracts, and access to the relationships and information that help them anticipate where opportunities are developing.”
Dr. Asheli Atkins, president and CEO of the Greater Houston Black Chamber, categorized Black businesses that seek funding. There are entrepreneurs who need the basics, such as understanding how to use accounting software like QuickBooks. Other businesses are ready to scale, having their foundation and systems in place. These business owners face challenges in landing procurement opportunities with the city and county. The remaining include entrepreneurs seeking access to capital through grants and loans, as well as those who have been in business for a few years and now need to build out their succession plan.
“Like a strategic financial group, we have so many different financial institutions that we work with that help our members to get access to grants as well as loans and lines of credit,” Atkins said.
“Access to capital is just the umbrella,” she said.
Tiffany L. Williams, CEO of the 14-year-old video production firm Twice Media Productions, offered a counterpoint on how to work around the gap, which comprises securing a line of credit well before it is needed. The decision to do so has kept her company afloat and payroll running through Hurricane Harvey in 2017.
“Understand how important cash flow is,” Williams said. “Understand how important cash flow is, your numbers, your financial statements. A lot of the organizations I’m involved with also provide scholarships for entrepreneurs. Every year that I’m eligible for those types of scholarships to improve my business education or further my business education, I take advantage.”
Contracting: Benefits of certification
Experts also suggest certification to widen chances of landing government contracts.
Certifies businesses that received MBE contracts increased 19% from 2021 to 2024, creating jobs for the local economy. They also generated $1 billion in taxes locally.
Davis believes that the next generation of Black entrepreneurs can scale their businesses in fields such as technology and AI-enabled services, infrastructure, energy transition, healthcare innovation, cybersecurity, advanced professional services, and supply chain solutions, where demand and investment are growing.
“Houston offers significant opportunities because of the size and diversity of our economy,” he added. “The opportunity is not simply to start more businesses, it’s to build scalable companies that can participate in Houston’s major industries, diversify their customer base and revenue, compete for larger opportunities, and develop the capacity to grow over time.”
Additionally, total MBE revenue jumped 180%, to $23.3 billion, supporting 118,600 jobs and contributing 3.5% to Houston’s Gross Domestic Product (GDP).
Black-owned firms make up the largest single racial group among those certified MBEs. But that numerical scale does not translate to a scale in dollars. Black MBEs account for just 19% of MBE employees and only 9% of total MBE revenue. By contrast, Hispanic-owned firms are 29% of the count but capture 51% of employment and 65% of revenue.
“Access to capital is important, but capital alone doesn’t create a scalable business.”
Brandon Davis, MBE Services director, Houston Minority Supplier Development Council
The productivity gap is stark when measured per worker. The average annual revenue generated per employee at a Black MBE is $195,000 compared with $540,000 for Hispanic-owned firms and $606,000 for Asian Indian-owned firms.
The bigger picture suggests Black-owned firms did grow. Their collective revenue nearly tripled, from $708.7 million in 2021 to just over $2 billion in 2024, and employment rose from more than 6,000 to 10,000 workers.
Where Black-owned businesses cluster
Professional, Scientific, and Technical services, such as consulting, accounting, engineering, and related fields, are the dominant sector for Black-owned MBEs, accounting for 37% of them. Administrative and support services, education services, and construction round out the next largest categories.
Atkins says the pattern holds inside her own membership base, too.
“Our biggest membership, the highest category… is finance and accounting,” she said, pointing to a wave of Black-owned CPA firms and consultancies.
On the other end, she flagged the restaurant industry as volatile, while noting that instability is not unique to Black-owned businesses.
