TLDR:
- Venture funding to Black-founded U.S. startups dropped by 71% last year, greatly outpacing the overall decline in startup funding.
- Black-founded startups received less than 0.5% of the $140.4 billion in venture funding all U.S.-based startups received in 2023.
In 2023, venture funding to Black-founded U.S. startups saw a significant decline of 71%, totaling only $705 million, compared to previous years. This marks the lowest amount of funding since 2016, falling below the $1 billion mark. The decline in funding to Black founders greatly outpaced the overall market decline of 37% in total venture dollars in the U.S. This decrease in funding meant that Black-founded startups received less than 0.5% of the total venture funding distributed in the U.S. last year, signifying a troubling trend in the venture capital landscape.
Despite promises from VC firms and investors to increase diversity in funding after the death of George Floyd, the numbers show a different reality. The article highlights the challenges faced by Black founders in raising capital, with a significant drop in late-stage rounds and large funding rounds. Deal volume for Black founders also plummeted, indicating that fewer companies are progressing to later-stage funding rounds.
Several factors contribute to the decline in funding, including a slowdown in consumer-facing sectors, where many Black-founded companies operate. The lack of large rounds and funding for consumer-facing startups with Black founders has contributed to the overall decrease in funding. Investors and experts emphasize the need for a solution to address the funding gap for Black-founded startups and to showcase the financial potential of startups led by diverse leadership.
Overall, the data illustrates the disparity in funding for Black-founded startups and the challenges they continue to face in accessing capital in the venture capital market. The article calls for increased awareness and action to address the funding inequities and support the growth of Black entrepreneurs in the startup ecosystem.
