Black founders raised 1.3% of last year’s $330 billion worth of U.S. venture investment, totaling just over $4.3 billion. So far this year, Black founders have raised a smaller 1.2% of the $125 billion invested.
The past few months have seen private market investors reduce their investment pace as a possible recession looms, but that 1% figure has barely budged, meaning economic rain or shine, it’s always a challenging time to be a Black founder.
This frustration is compounded because two years ago, “the powers that be” promised change after the murder of George Floyd. The “racial reckoning” — as some called it — saw many voices pledge to help construct a more socially and economically equitable startup market that, this time, included minorities. Minuscule and even backward progress in creating a more fair venture market is dismissive of the importance of change, especially because significant economic progress is needed to help the Black community close the wealth gap.
To repeat what’s been said continually: One can’t outperform, outshine or tactically maneuver around a system that’s intrinsically discriminatory. A million articles can be (and have been) written discussing a lack of equitable fundraising results, fraught funding journeys for minority founders and the need for more diverse LPs, more empathy, more opportunities, more this, more that, just more, more, more — and yet that 1% figure is staying essentially the same. It’s a more significant societal issue masked by the constant reassurance the venture market is on the precipice of change. And yet Black founders are raising an even smaller portion of venture dollars this year than last.
Change takes time when there are mentalities to shift and hearts to sway, though the venture funding gap issue is not quite as challenging to fix as some make it out to be — there are billions of dollars to invest, so all that’s needed is to put more of that capital to work in the businesses of minority founders.
With two quarters left in the year, here are some predictions for what the Black founder community should expect — and aim to do next.