Black founders are creating exceptional products and driving innovation. However, the statistics have remained stagnant, highlighting a need for change. Remember, supporting Black founders is crucial for true diversity. Progress can only be achieved if we move forward together, not separately. This is what we aim to achieve @ Diversity-X
Black founders raised a smaller portion of early-stage venture capital in 2023 than they did in 2021 or 2022.
The percentages here are quite small, so the numbers can be noisy.
But the overall pattern is stark. 2023 was the lowest share of fundraising for Black founders in our Carta dataset since 2020. The declines were consistent across pre-priced, Seed, and Series A rounds.
There are likely a whole host of reasons for these dispiriting numbers. One underreported thesis is that as VCs sought to reduce risk in the venture downturn of the last year or two, they funded repeat founders to an even larger degree than in prior timeframes.
And Black founders are less represented among repeat founders (who would have had to found their companies in a less diverse VC ecosystem) than they are among founders as a whole.
Just one thread, of course. Lots more data on how venture funding broke down along gender, race, and ethnicity in our Carta Equity Report - link in graphic or just type in "Carta Equity Report" into Google.
Work to be done!
Black founders raised a smaller portion of early-stage venture capital in 2023 than they did in 2021 or 2022.
The percentages here are quite small, so the numbers can be noisy.
But the overall pattern is stark. 2023 was the lowest share of fundraising for Black founders in our Carta dataset since 2020. The declines were consistent across pre-priced, Seed, and Series A rounds.
There are likely a whole host of reasons for these dispiriting numbers. One underreported thesis is that as VCs sought to reduce risk in the venture downturn of the last year or two, they funded repeat founders to an even larger degree than in prior timeframes.
And Black founders are less represented among repeat founders (who would have had to found their companies in a less diverse VC ecosystem) than they are among founders as a whole.
Just one thread, of course. Lots more data on how venture funding broke down along gender, race, and ethnicity in our Carta Equity Report - link in graphic or just type in "Carta Equity Report" into Google.
Work to be done!
This doesn’t change without two key steps:
1) Activating more Black Angel investors and LPs. There are thousands of Black individuals and couples who qualify as accredited investors, don’t know it, and have no VC/PE exposure. Also, crowdfunding makes investing accessible to non-accredited investors. Funding Black founders can actually INCREASE the wealth gap depending on how their companies are funded and who gets the majority of the proceeds upon exit.
2) Using social and political power to direct government and philanthropic resources to leverage capital from step 1. All medium to large organizations that claim to be in service of the Black community need to be laser focused on this. The main thing missing here is exceptional leadership with transparent and competent governance infrastructure.
Until we do these two things, these stats won’t change. I’m not guessing, I’ve got historical records and basic math on my side.
Black founders raised a smaller portion of early-stage venture capital in 2023 than they did in 2021 or 2022.
The percentages here are quite small, so the numbers can be noisy.
But the overall pattern is stark. 2023 was the lowest share of fundraising for Black founders in our Carta dataset since 2020. The declines were consistent across pre-priced, Seed, and Series A rounds.
There are likely a whole host of reasons for these dispiriting numbers. One underreported thesis is that as VCs sought to reduce risk in the venture downturn of the last year or two, they funded repeat founders to an even larger degree than in prior timeframes.
And Black founders are less represented among repeat founders (who would have had to found their companies in a less diverse VC ecosystem) than they are among founders as a whole.
Just one thread, of course. Lots more data on how venture funding broke down along gender, race, and ethnicity in our Carta Equity Report - link in graphic or just type in "Carta Equity Report" into Google.
Work to be done!
Worth reading!
"The majority of new hires across each of these key job areas are white, and the gap between hires who were white and those who were people of color increased in 2023 in each segment except for product roles. The smallest gap is in data, where 58% of hires this year are white and 42% are of other races and ethnicities. The largest gap is in sales roles, where 86% of new hires this year are white.
Over the past two years, the biggest change has occurred in human resources (HR) roles, where the rate of non-white hires has fallen from 29% in 2021 to 21% in 2023. The racial and ethnic background of new hires has also shifted noticeably in operations and customer success."
https://lnkd.in/enYWtuMC
Black founders raised a smaller portion of early-stage venture capital in 2023 than they did in 2021 or 2022.
The percentages here are quite small, so the numbers can be noisy.
But the overall pattern is stark. 2023 was the lowest share of fundraising for Black founders in our Carta dataset since 2020. The declines were consistent across pre-priced, Seed, and Series A rounds.
There are likely a whole host of reasons for these dispiriting numbers. One underreported thesis is that as VCs sought to reduce risk in the venture downturn of the last year or two, they funded repeat founders to an even larger degree than in prior timeframes.
And Black founders are less represented among repeat founders (who would have had to found their companies in a less diverse VC ecosystem) than they are among founders as a whole.
Just one thread, of course. Lots more data on how venture funding broke down along gender, race, and ethnicity in our Carta Equity Report - link in graphic or just type in "Carta Equity Report" into Google.
Work to be done!
Breaking News: VC Investment into Black Founders is Down...Again
We've seen the reports earlier in the year, but this report from Carta and Peter Walker adds a little bit to an already longstanding conversation.
In reading the full report, I have 3 main takeaways as it relates to the downward trend for Blacks in startups.
#1. As Bad As it Looks, It's Even Worse
Carta's report only looks at startups on its platform. From that data set, they determined Black founders received just 1% of unpriced venture capital funds. However, in a wider study, Crunchbase reported that just $700m went to Black founders in 2023, down from $4.9b in 2021. That $700m represented just 0.5% of the total $140b that went to all U.S. startups last year. https://lnkd.in/eRDXkM7Q
#2. It's Even Bad for Black Startup Employees
One of the big things Carta can lend to this conversation that others can't is what it looks like for Black people getting jobs at venture-backed start-ups. Well, as you can imagine, it's not good. In 2021, despite being ~13.5% of the population, Black people were just 2.8% of the new hires to Carta-using startups. But it got even worse in 2023, with just 2.3% of new start-up hires being Black.
#3. We're Dropping Out of the Game
Perhaps even more scary, and likely a result of these first two takeaways, is that there are fewer Black founders entering the VC game than there were 2 years ago. Black founders represented 3.9% of newly incorporated Carta startups in 2021, but that dropped to just 2.7% in 2022—nearly a third less.
That's a big problem. Deterred by a lack of funding when they do start, and getting fewer start-up employment opportunities, Black people are essentially dropping out of participating in VC.
Of course, there are many other ways to make money in the world—some with higher expected returns than VC, especially for those privileged to consider VC a plausible choice.
However, being left out of markets is not a good thing—especially when it's not really Black talent making that choice for themselves. We know that Tech is going to continue being a driving force in wealth creation, especially with AI sucking up so much of the market. Thus, for any semblance of equal opportunity at wealth creation, Black people have to get a fairer shake at participating in Venture Capital.
But the problem is that smart people aren't going to sit around and wait to be treated fairly. On average, they're just going to find a better, more favorable opportunity, even if the ceiling isn't as high. And that's a problem. For both Black people and the rest of the economy.
Every quality report out there suggests that the systemic prevention of Black people's full participation in all areas of the economy is costing our nation immensely. And given the crazy times we're in, I'm not sure we can afford to maintain that status quo.
Black founders raised a smaller portion of early-stage venture capital in 2023 than they did in 2021 or 2022.
The percentages here are quite small, so the numbers can be noisy.
But the overall pattern is stark. 2023 was the lowest share of fundraising for Black founders in our Carta dataset since 2020. The declines were consistent across pre-priced, Seed, and Series A rounds.
There are likely a whole host of reasons for these dispiriting numbers. One underreported thesis is that as VCs sought to reduce risk in the venture downturn of the last year or two, they funded repeat founders to an even larger degree than in prior timeframes.
And Black founders are less represented among repeat founders (who would have had to found their companies in a less diverse VC ecosystem) than they are among founders as a whole.
Just one thread, of course. Lots more data on how venture funding broke down along gender, race, and ethnicity in our Carta Equity Report - link in graphic or just type in "Carta Equity Report" into Google.
Work to be done!
1% of pre-seed funding goes to black founders. As the 483rd black person in US history to raise over $1M for their startup, I'm often asked how I became part of this exclusive group.
I built a business that hit breakeven by month two and was generating $15,000 in profit by month 4. We were impossible to ignore, leading to me closing $750,000 in capital in under three weeks.
However, the harsh reality is that structural racism and bias within the VC industry make it an *extremely* unreliable source of capital for black founders. Even more so than for women, Asians, or any under-represented group.
Most Tier 1 funds have never backed a black founder in their multi-decade history. And of those who have, the number of black founders in their portfolio is in the single digits.
Therefore, black founders MUST prioritize building a business with sustainable unit economics and a clear pathway to profitability. If you need capital, raise from family and friends, apply for SBA loans and grants, leverage no-code/low-code tools, and do anything else it takes to build the business without VC funding.
Once you have a business that is generating significant revenue and on a clear pathway to breakeven, you're actually ready to approach VCs. Because that is the only time they will pay attention.
White founders have the luxury of asking VCs to fund their ideas.
Black founders do not.
Your job as a black founder is to change the conversation from "fund my idea" to "fund my growth."
If you can do that, you'll quickly join our ranks as one of the few black VC-backed founders.
Black founders raised a smaller portion of early-stage venture capital in 2023 than they did in 2021 or 2022.
The percentages here are quite small, so the numbers can be noisy.
But the overall pattern is stark. 2023 was the lowest share of fundraising for Black founders in our Carta dataset since 2020. The declines were consistent across pre-priced, Seed, and Series A rounds.
There are likely a whole host of reasons for these dispiriting numbers. One underreported thesis is that as VCs sought to reduce risk in the venture downturn of the last year or two, they funded repeat founders to an even larger degree than in prior timeframes.
And Black founders are less represented among repeat founders (who would have had to found their companies in a less diverse VC ecosystem) than they are among founders as a whole.
Just one thread, of course. Lots more data on how venture funding broke down along gender, race, and ethnicity in our Carta Equity Report - link in graphic or just type in "Carta Equity Report" into Google.
Work to be done!
Founding Board Member of the Springfield Tech Council, Past President of the Mid-America Technology Alliance, Tech Founder. Freelance Creative & Tech Professional.
Here's one for all my fellow midwest tech founders! November 7th, 60 venture investors are converging on KC for the Mid X Midwest event. This is a great opportunity to grow your network.
This is the largest venture ecosystem gathering in the region and it's an exclusive opportunity for venture-backed and venture-ready B2B software companies to connect, collaborate, and catapult their visions forward. If you're anywhere from Pre-Seed to Series B or preparing for a venture raise, you should definitely apply for this event!
#MidwestTech#Startups#VentureCapital#Founders#MidXMidwest
Founders shouldn’t have to pass a test before they even meet a VC fund.
But that’s how the industry has worked: founders need a warm intro from their network just to get a foot in the door…
Until now.
At January Ventures, we’re changing the typical dynamic between investors and founders.
We’ve seen scores of founders from outside of the traditional venture networks build venture-scalable businesses.
We don’t want to have a filter on our deal flow. So we're meeting founders first.
By changing the relationship between founders and investors, we’re hoping to increase transparency across the VC ecosystem.
VC has long operated as a bespoke, apprenticeship-based club shrouded in mystery.
That reinforces extant, narrow networks and makes it nearly impossible for new founders to break in.
At January Ventures, we want to demystify venture for both founders looking to raise capital and folks who want to enter the venture field themselves. We’re pulling back the curtain and shedding light on every step of the process.
Democratizing venture is going to be a long road.
But ditching the introduction “test” is a hugely important first step.
AI startup advisor 'force multiplier' whose superpower is connecting and illuminating the dots that matter faster, better, smarter than you and 99.9% of people ;-)
Most VCs don’t add as much value as they think
https://lnkd.in/gKXfFKMZ
- 33% of founders said that they felt VCs simply weren’t honest about the expertise they could offer
- 65% said VCs missed mark delivering beyond cash
- Female founders rated value-add as twice as important than males
- Value-add includes connections to partners, customers, talent, sharing knowledge
Lean AI startups are new black get so get grants + angels + perhaps one right VC for pre seed for MVP for initial traction then with CVP after crossing $100K MRR raise seed at 2.5x valuation of pre seed then get to $10M ARR in 2 years with $100M valuation with awesome cap table where VC's own 20% max.
Cheers.....Steve
AI startup advisor 'force multiplier'
https://lnkd.in/g38mWcs
🌱 For pre-seed/seed founders 🌱
The early stage vc markets have changed drastically -- but many founders don't truly understand how or how much things have shifted until its too late or they are deep into the fundraising process already.
This recent Allocate pod lifts the veil on the pre-seed/seed 2024 markets. SO MANY GEMS are packed 💎 into the first 20 min, I had to listen twice.
Key takeaways from pre-seed VCs I'm a big fan of Jenny Fielding of Everywhere Ventures, Kirby Winfield at Ascend (PNW represent!) & Nate Williams.
💎 The market in one word: 'turbulent'
💎 Fundraising bi-furcation; 2X founder building in AI (rounds take weeks) vs All Others (rounds take up to 6 months).
💎 "Leading VCs" (ie. first check in) are putting in a TON of work - building conviction & then helping founders fill the round.
💎 Up to 5 rounds pre-A; need lower early valuations to enable step ups
💎 Pre-seed entry valuations have corrected to $5-8M
💎 Round sizes have increased at pre-seed & seed for extended runway
Many more insights in the full pod here:
https://lnkd.in/gYf-DMr6#venturecapital#preseed
🌟 Black Investors Changing the VC Landscape Series: Part 40 - Lo Toney, Plexo Capital 🚀
Introducing Lo Toney, the visionary behind Plexo Capital , revolutionizing venture capital with a focus on diversity and inclusion.
Notable Investments: Blavity Inc. , Mayvenn , StyleSeat , Wonderschool , Wrapbook
Investment Focus: Plexo Capital invests in venture-capital funds and makes direct investments in select startups, prioritizing diversity across industries.
Why He's on the List:
Lo Toney recognized the untapped potential in startups led by women and people of color during his tenure at Comcast Ventures and GV (Google Ventures) . Determined to address this disparity, Toney launched Plexo Capital with a groundbreaking thesis: by building a network of diverse fund managers and institutional partners, they could drive superior fund returns.
Since its inception in 2018 as a spinout from GV, Plexo Capital has been a catalyst for change in the venture capital landscape. With a $42.5 million fund, Plexo has established partnerships with prominent firms led by diverse bakgrounds, including MaC Venture Capital, Female Founders Fund , and Equal Ventures .
In addition to backing these firms, Plexo Capital makes direct investments in startups alongside them, championing founders from underrepresented backgrounds. Through initiatives like GPx, a mentorship program for new fund managers, Plexo is nurturing the next generation of diverse investors.
Lo Toney's leadership at Plexo Capital is driving tangible progress towards a more inclusive and equitable venture ecosystem, unlocking opportunities for diverse founders and investors alike.
✨Connect with Lo Toney and Plexo Capital to learn more about their transformative approach to venture capital.
Stay tuned for more inspiring profiles of Black investors leading the charge in our daily series! Share your thoughts and other impactful investors in the comments below.
#BlackInvestors#VentureCapital#DiversityInTech#startup#investor#Entrepreneurship
