Investors are unable to see that they're biased against businesses owned by women and minorities, according to an online survey of nearly 270 investors and bank loan officers by Morgan Stanley.
There is a "clear disconnect" between the way investors perceive their investments in businesses owned by women and people of color, and the amount of money they actually invest, Morgan Stanley wrote. Nearly eight in 10 investors say women- and minority-owned businesses receive about the right amount of capital they deserve, but these businesses do not raise as much funding as their counterparts. Investors reported median investments of $213,000 in women-owned businesses and $185,000 in minority-owned businesses, lower than their overall median investment of $969,000.
The survey also found that investors are more likely to review men- and nonminority-owned businesses than those run by women and minorities. Investors, especially those who are white and male, are not working to increase the diversity of candidates they consider. Women and minorities are also subjected to a higher standard, according to the survey. In addition, investors perceive the businesses owned by women and minorities as riskier and investors might be unfamiliar with the target markets of these businesses.
The report suggested there was a missed opportunity of $4.4 trillion in gross business revenues due to the capital investment inequality, based on data from the U.S. Census Bureau's 2012 Survey of Business Owners.