Hallo Research: Black Founder Funding Q3 2020
Over 1300 startups raised funding in Q3 2020. Why did only 31 have black founders?
It’s been four months since the protests began demanding an end to the systemic racism that plagues our country.
Americans from all races, genders, and backgrounds took to the streets, together, to demand change. Millions of social media users across the world posted signs of solidarity. And companies big and small shared visuals with perfectly crafted copy to communicate that they too stood together with the Black community.
In the tech community, venture capital firms acknowledged the problem — less than 1% of founders who receive venture funding are Black, despite making up over 13% of the US population. Many outlined initiatives and action plans aimed at tackling this problem.
As a Black founder myself, this is a topic that’s close to my heart. I’ve been fortunate enough to raise funding from some incredible investors who believe in my company Hallo’s vision to help connect diverse student talent with top companies.
But that journey to raise capital wasn’t easy. Sure, raising venture capital is hard for anyone, regardless of race, but how many white founders have had to deal with the embarrassment of arriving at a pitch only to be confused for the delivery man? How many have had an investor say, “Don’t run off to Cabo now!” after they’ve agreed to potentially invest?
These are just a few of the many painful and humiliating stories that I experienced as I flew around the country looking for investors. Many Black founders have stories that are far worse.
But with the promise of change made by so many in the midst of these recent protests, many Black founders, myself included, were optimistic. Maybe we’re making true headway to equal investment opportunities.
Well, four months later, how much progress has been made? How many Black founders have received funding? How much have they raised?
To answer these questions, we wanted to put hard numbers behind the promises of so many venture capitalists and create a benchmark for how we can track the investment into black founders over time. So our team pulled a list from Crunchbase of all the startups globally with a total funding amount of $500,000 — $20,000,000 and who raised a round between July 1 and October 1. There were over 1383 companies here and our team went through one by one, to see how many Black founders there were.
Here are our findings:
Stop talking. Start investing.
I shouldn’t be able to nearly count the number of Black founders who raise funding in a quarter on my fingers and toes. If this is how tech responds to calls for change in the heat of the conversation around systemic racism, what can we really expect to see in the years to come?
It’s easy to have a graphic designer whip up a graphic that says “We stand in solidarity.” It’s easy to have your content writer write up a blog post about the changes you will make. It’s easy to join webinars and panels to talk about “the problem”. It’s easy to have your PR firm write up a press release about the new Black associate you just hired (who actually can’t make investments).
But what we — the Black founder community — actually need is for you — the venture capitalists — to stop talking. Start listening. Then start investing in and supporting Black founders.
Do it because it’s the right thing to do. And if that’s not enough for you — do it because data shows companies with diversified teams perform better and make more money in the long run.
The Weekly Black Founder Report.
Going forward, every Monday, I’ll be posting a similar chart with a summary of the hard numbers — how many Black founders there were and how much was raised compared to other founders.
Our objective here is to keep a weekly pulse on progress being made so we can ensure that all the awareness and momentum that was built in June doesn’t slowly fade away.
Real diversity means real change. It’s up to venture capital firms and the startup community to decide if they are willing to step up and take action or simply stand back and allow black founders to be held back and limited by the ability to access venture capital.
Methodology:
The numbers represent the global startups who raised a round of capital between July 1 and October 1, 2020. The total funding criteria was $500,000 — $20,000,000. This data was sourced from Crunchbase. Companies with at least one black founder were included. Six startups with black founders raised less than $500,000 or did not have any funding data disclosed were not included in the final numbers.
