The Difference In Crowdfunding For Black Women Tech Founders

The World Economic Forum published an article citing that only 2% or less of venture capital funding went to women founders in 2023. The number is even less for Black women founders. Unfortunately, Black women tech founders have to jump through hoops to be considered for crowdfunding, private equity, or angel investing.

Gender bias plays a large role in the huge discrepancy between male-led organizations and female-led organizations receiving funding. According to an article published on Yale Insights, women are underrepresented. In the group of startup founders who receive funding from venture capital investors, men dominate. Women represent just 16% for first-time venture capital-backed entrepreneurs.

In addition to gender bias, racial prejudice also plays a role. Crunch Base News reported a biennial study on Black and Latinx woman founders conducted by Digital Undivided found that only 93 Black women founders raised over $1 million, while in contrast, the majority of Black women founders only raised $125,000, which is a fraction of the national average of $2.5 million.

With all the friction surrounding being Black and being a woman in the tech start-up arena, is there anything Black women founders can do to offset the friction and balance the scales?

Affinity bias is a term used to describe the action of gravitating toward people like ourselves in appearance, beliefs, and background. Additionally, affinity bias means we may avoid or even dislike people who are different from us.

It is no wonder that women are impacted by affinity bias, as tech is a male-dominated field. According to research conducted by Zippia, women make up only 28% of the tech industry.

The previously mentioned Crunchbase News article elaborates on an important fact. The article states that 1 in 4 Black women entrepreneurs believe the top challenge they face is a lack of mentorship. In addition, they mention limited networks as a challenge as well. Research has shown that Black women founders don’t have access to the same networks and resources as their male counterparts. This leaves Black women at a disadvantage when it comes to raising capital, narrowing the pipeline for future investment opportunities.

Essence, a media site, published an article featuring Antonia Dean, one of the few Black women leading in venture capital. Dean shares that “Most Black founders know that access to capital is more challenging for us. So while there has been a shift, Black founders have always had to think two steps ahead and build companies that are more resilient because they knew that the well would dry up eventually,” Dean says. They focus on getting product-market fit sooner, getting paying customers earlier, and building businesses that can survive without constant VC money.

As if the hoop of raising capital couldn’t get any bigger? It can! Not only do Black women have to jump the hurdle of finding funding and raising capital, but access to institutional capital is also next to none. A Harvard Business Review study found that 61% of Black women self-fund their startups.

Data is revealing the stark difference in crowdfunding. Black women tech founders, in comparison to their white and male counterparts in tech, do not have the same experience raising capital. Although Black women are the largest group of new entrepreneurs, it continues year over year that Black women scrape the bottom of the fundraising bucket at a mere 1%. The already uphill battle of finding success in a startup is met with additional barriers of entry simply due to being a woman and being Black.