Report: Venture Capital Support For Black-Founded Startups Is Dwindling
Recent news that the Fearless Fund, a venture capitalist firm that invests in women entrepreneurs of color, will cease offering a funding program for Black women entrepreneurs highlights a significant discrepancy in the amount of money that Black-founded U.S. startups receive, according to Crunchbase.
Black-founded startups received $228 million in funding, just .3% of nearly $79 billion that went to startups in the U.S., according to Crunchbase. In the second half of 2023, Black-founded startups received just $123 million in funding.
Last year saw Black-founded startups receiving the lowest amount of money in funding since 2-16, totaling only $699 million, according to Crunchbase data. In contrast, Black-founded startups garnered a significant amount of funding support in 2021 ($4.5 million) and again in 2022 ($2.5 billion).
Deals Are Slowing Down
According to Crunchbase, Black-founded startups made only 28 funding deals in the second quarter of 2-24, the lowest of any quarter since 2019.
The first half of 2024 saw a total of 66 funding deals, a 53% drop in deals from the same timeframe in 2023, according to Crunchbase.
Comparatively, 22 U.S.-based startups each raised more than $25 million in just the second week of September this year.
Deals Made In The First Half Of 2024
According to Crunchbase, the largest rounds of funding secured by Black-founded startups in the first half of this year include Flutterflow ($25.5 million), FinQuery ($25 million) and Campus ($23 million).
In 2023, the largest rounds of funding secured by Black-founded startups included Juniper Square ($133 million), Macro ($90 million), and Clerkie ($33 million), according to Crunchbase.
Despite these wins, Black founders are expected to raise less than half a billion dollars for startups by the end of 2024. So far, the combined total funding to Black founders in the second half of last year and the first half of this year is only $351 million, according to Crunchbase.
Lack Of Funding Outpaces Market Decline
The lack of funding for Black-founded companies is greatly outpacing an overall decline in funding for U.S. startups, according to a Crunchbase report from earlier this year. Total venture funding in the U.S. fell 37% percent last year, but funding to Black-founded startups dropped 71%.
Additionally, Black-founded startups received less than .05% of the $140.4 billion given to U.S.-based startups in 2023.
Many venture capital firms promised to increase the diversity of their spending in 2020, but the data shows that effort has not yet been successful, according to Crunchbase.
