Startups Raised Over $12 Billion in Q4 2020. Only 40 Were Led By Black Founders.
Last October, I published the results of our first quarterly Black Founder Funding report. The findings were eye opening — out of the 1,383 companies that raised funding in Q3 2020, just 31 of them had Black founders.
Techcrunch, WIRED, and dozens of other media outlets covered the findings. Countless Black founders reached out to me and shared their own personal struggles. And many others — of all races — reached out and thanked me for bringing this data into the public view.
While the majority of the comments were positive, many were dismissive. Investors, founders, and others made excuses for the numbers, justified them with their own twisted statistics, and downplayed the significance of the problem. I held back and didn’t bother arguing with these people. Most of them, of course, weren’t Black.
Those who shared dismissive comments have no idea what it’s like to be a Black founder trying to raise funding for a startup. They’ve never been confused for a delivery driver as they arrived at a pitch and never had a VC tell them to not “run off to Cabo” with their investment funds. This was the reality I faced as I raised funding for my company Hallo, and these are the situations that other Black founders face every day.
This lack of education and the lack of willingness to admit that there is a systemic problem with diversity in funding is exactly why I will continue to publish these reports every quarter. I look forward to tracking the progress being made for Black founders. I hope these reports will become a beacon of hope for Black founders and a chance for VCs to see their efforts to add Black founders to their portfolios is making a difference.
In Q4 we revised our criteria to include companies that have raised total funding of $1,000,000 to $50,000,000. Our Q3 report included those who raised $500,000 — $20 million in total. We increased the criteria here because a lot of the feedback I heard from Black founders focused on the fact that they routinely saw their white competitors dramatically out-raise them.
Is 2021 the Year of Action or Talk?
I want to acknowledge all the investors out there who are taking steps to address the lack of diversity in funding. I realize change doesn’t happen overnight and it will take years — if not decades — to truly see the impact of today’s efforts.
But for those VCs who simply posted their “we stand in solidarity” message across social media back in June, yet haven’t taken any meaningful action to back Black founders, you should be ashamed of yourselves.
The Black founder community doesn’t need VCs to just say they stand in solidarity, we don’t need Black associates on your team with no investment decision making authority, and we don’t need webinars to teach us how to appeal to investors.
What we need is for you to stop talking, start listening, and start investing and supporting Black founders. That’s the only thing that will truly move the needle in creating equal funding opportunities.