Venture capital funding has historically been a challenge for underrepresented founders, particularly women and Black and brown entrepreneurs. Crunchbase has been closely monitoring funding trends to identify moments of progress and setbacks for marginalized communities.
In 2021, Black founders experienced a surge in funding, but this declined significantly as the market cooled and diversity, equity, and inclusion (DEI) initiatives took a back seat. On the other hand, women founders have seen relatively consistent funding levels, hovering around 2% in recent years. Interestingly, funding for mixed-gender teams has been on the rise, suggesting that women founders may receive larger investments if they have a male co-founder.
Funding for Black founders has been on a downward trend since 2021, indicating a waning interest from investors in supporting Black-led startups. Despite promises to better support Black founders following the murder of George Floyd, funding to this group has continued to decline. In 2023, Black founders in the U.S. only raised 0.48% of all venture capital dollars, amounting to $661 million out of $136 billion.
TechCrunch has been engaging with experts to understand what is needed to boost funding for Black founders, but the story has remained unchanged for over a decade. Calls for more opportunities, increased funding, greater trust, reduced bias, and less pattern-matching have not yet been addressed.
Funding for women founders has remained relatively stagnant, with female-founded startups raising $15.5 billion in the first half of 2024. However, solo women founders continue to face challenges when it comes to securing investments. In 2023, funding for female founders remained consistent at 2.1% of all venture capital investments.
While the focus is often on Black founders and women, other marginalized communities also struggle to secure funding. Latino founders face similar challenges, with funding levels comparable to those of Black entrepreneurs. Additionally, members of the LGBTQ community encounter obstacles when seeking investor capital, prompting Crunchbase to start tracking venture capital dollars allocated to LGBTQ+ founders.
Beyond the U.S., marginalized founders in Europe have shared their experiences with raising capital and their aspirations to enter the U.S. market despite facing similar challenges. Black British founders, in particular, have faced setbacks but remain resilient in their pursuits.
Overall, the funding landscape for underrepresented founders remains challenging, with calls for increased support, reduced bias, and more opportunities to level the playing field. It is crucial for investors and the startup ecosystem to address these disparities and work towards a more inclusive and equitable funding environment for all entrepreneurs.
