Venture capital funding has historically been a challenge for women, Black, and brown founders. Crunchbase has been diligently monitoring funding levels to identify moments of progress and regression for marginalized entrepreneurs. Let’s take a closer look at the recent trends in funding for underrepresented groups.
Key Takeaway
The funding landscape for underrepresented founders, particularly Black and women entrepreneurs, continues to present challenges, with consistent or declining levels of venture capital allocated to these groups. Efforts to address these disparities remain ongoing, with a need for sustained support and opportunities for marginalized entrepreneurs.
Funding for Black Founders
Funding for Black founders has been on a downward trajectory since 2021, indicating a waning interest from investors or a shift in focus away from supporting Black founders. Despite promises to better support Black founders following the murder of George Floyd, the commitment seems to have dwindled. In 2023, Black founders in the U.S. secured a mere 0.48% of all venture dollars, amounting to approximately $661 million out of $136 billion.
- Q4/2023 Overall: Funding to Black founders was down for the third consecutive year
- Q3’23: Black founders received only 0.13% of capital in Q3
- Q2/H1’23: Commentary: The old guard in venture reigns supreme
- Q1’23: Funding for Black founders dipped to 0.69% in Q1
Despite ongoing efforts and calls for more opportunities, trust, and less bias, the funding landscape for Black founders has shown little improvement over the years.
Funding for Women Founders
Conversely, funding for women founders has remained relatively consistent, hovering around 2% in recent years. However, solo women founders continue to face challenges in securing investments from venture capitalists.
- 2023 Overall: Funding for female founders remained consistent
- Q3’23: Q3 data for women reflects a similar trend
- Q2/H1’23: Startups with all-women founding teams raised $1.4B in H1
- Q1’23: Funding for women remained at 2.1% of all VC investment in Q1 2023
Funding for Other Marginalized Groups
While Black and women founders dominate discussions on inequitable funding, other communities, such as Latino and LGBTQ+ founders, also encounter challenges in accessing venture capital. Latino founders, in particular, face difficulties in raising capital, mirroring the struggles of the Black community. Additionally, members of the LGBTQ+ community are also confronted with obstacles when seeking investor capital.
- Q3’22: Latin American founders see VC funding drop as investors retreat from underrepresented cohorts
Commentary on the Funding
Various experts, investors, and founders have shared their perspectives on the funding landscape for marginalized groups. From debunking myths about why diverse startups are not funded to exploring the challenges faced by Black founders, the discourse surrounding inequitable access to funding continues to evolve.
View from Beyond the U.S.
Challenges in accessing funding are not limited to the U.S. Marginalized founders across Europe have also voiced their experiences in raising capital and their aspirations to enter the U.S. market, despite the obstacles faced by many minorities.
