VCs’ Bad Diversity Track Record Gets Worse in the Downturn
Only a few Black-led companies have reached unicorn status.
It’s a complicated time to be a Black entrepreneur. Some Black founders in recent years have created formidable startups with towering valuations. But there are still shockingly few large VC-backed startups with Black leaders, and recent months’ chaos in the venture capital market has taken a disproportionate toll on their companies—wiping out diversity gains in fundraising.
On the heels of the Black Lives Matter movement, Black entrepreneurs raised record amounts of venture funding. In the second quarter of last year, they took in $866 million according to Crunchbase data, almost double the previous year’s US total. But in the second quarter of this year, Black-founded companies raised just $324 million, a 63% drop. Meanwhile, the decline in the VC industry as a whole was not nearly as stark: PitchBook data shows that overall VC funding in the US fell by just 23% in the same period.