Startups Raised Nearly $14 Billion in Q1 2021. Only 25 Were Led By Black Founders.

This article was written by Vern Howard, CEO of Hallo

Last quarter, when I published the results of our Black Founder Funding report, I asked, “Is 2021 the year of action or talk?”

So far, unfortunately, it’s been the year of talk. In the first quarter of 2021, 1422 startups received funding, yet only 25 of those companies are led by Black founders.

I started publishing these reports not only to put hard data behind investments to Black founders and to be able to track them over time. But I also started publishing these reports to provide more transparency for Black founders into how much is being invested, and hopefully into how the industry is improving around backing Black ventures. Since I started doing so, numerous Black founders have reached out to share their stories, and others have been grateful to see these numbers in print and given the media coverage they deserve.

But these reports are also a way to hold investors accountable if the numbers don’t show progress. And they aren’t showing progress. Despite the fact that we’re nearing a year since the racial protests calling for more equity and justice across all areas of society, investments in Black startups have actually gone down.

In Q3 of 2020, 1300 startups received funding, and only 31 of those were Black-led — a percentage of 2.4%.

In Q4 of 2020, 1537 startups received funding, and 40 of those were Black-led. 2.6% is a bit of an improvement, but still an embarrassingly low amount.

In Q1 of 2021, however, out of the 1422 startups that received funding, only 25 were Black-led — a percentage of 1.8%. Which simply isn’t acceptable.

2021 Can Still Be the Year of Action

I’m going to echo my plea from past reports, and will continue to do so as long as we find numbers like this.

Investors: Stop talking. Start listening. And start investing.

While there certainly are VC firms working to address the lack of diversity on their teams and in their portfolios, not nearly enough are. There are still plenty of firms who think that issuing a statement of solidarity is enough, and that it lets them off the hook for not having any Black associates involved in decision-making, or not backing any Black founders, or perpetuating systemic racism or a culture of “that’s how we’ve always done it” within their walls.

Too often Black founders like me have shown up for pitches only to be confused for a delivery driver, or are condescendingly told by an investor not to run off with the funds. Or we’re told that we need to learn how to “better appeal” to investors when other founders who are not Black don’t get that advice.

All of this is simply not acceptable anymore. Not only is it preventing Black founders from bringing innovation and solutions to the world, it’s shameful behavior on the part of investors.

VC firms need to do better, and must commit to the work of changing their internal cultures towards more diverse and inclusive practices. But they also must start writing checks, and putting dollar amounts — not just lip service — to their backing of Black-led businesses.

Methodology

The numbers represent the global startups who raised a round of capital between January 1 and March 30, 2021. The total funding criteria was $1,000,000 — $50,000000. This data was sourced from Crunchbase. Companies with a CEO who was Black were included.