The amount of capital raised by Black entrepreneurs continues to decrease.
The latest Crunchbase numbers show that Black founders raised $187 million in Q3, a staggering decline from the nearly $1.1 billion they received in Q3 2021 and a sizable drop from the $594 million the cohort raised in Q2.
Black founders raised just about 0.43% of the nearly $43 billion deployed in Q3. (Correction: This article was updated to show that Black founders raised 0.43% of all venture funds for Q3, not 0.12%.)
Within that, Black women raised 49% of all the capital allocated to Black founders in Q3, according to Crunchbase, pacing the number at around $91.63 million. To grab crumbs, it’s good, at least, to see that Black men and women appeared to receive nearly equal amounts of funding this quarter, even though the number they split is appalling.
Frankly, there are homes worth more than $187 million. Adam Neumann raised more in one round than all Black founders could in one quarter. Adele is worth $220 million. However, these numbers are not necessarily surprising. TechCrunch reported investors often retreat to their networks amid economic downturns, taking fewer risks on minorities.
Perhaps this is best exemplified by the fact that the capital raised by Black founders this Q3 is roughly on par with the $180 million allocated to the cohort in Q3 2020. However, Black founders were able to raise that $187 million from just 32 deals, compared to 2020, when it took 93 deals to hit $180 million.
In total, Black founders have raised a little more than $2 billion in venture capital this year, a decrease from the stunning $4.72 billion allocated in the record-breaking year that was 2021.
Sadly, Black founders are not the only group seeing a dip in funding. TechCrunch previously noted that women overall are also feeling the pinch. PitchBook found that they’ve raised only 1.9% of all venture funds this year, which, so far, is tracking as a decrease from the total 2.4% of capital raised last year. Asking Black founders and investors about this issue becomes fruitless after awhile, although, of course, it’s important to note and keep track of the progress or degressions that happen to marginalized groups (hence this article).
But Black founders and investors are far from solely responsible for making a change: It’s those LPs, those rich white men, those boys-club GPs and big institutions that need to be held accountable.
Inequality remains the only thing trickling down. So many promises, but where is the money?
Tiana Tukes, an investor at Colorful Capital and one of the few openly Black trans women working in the venture space, echoed sentiments many in the Black community have when asked about this topic. “When the venture capital industry catches a cold, underrepresented founders catch pneumonia,” she told TechCrunch.
Tiffanie Stanard, CEO and founder of Stimulus, agreed.
“It’s unfortunate when you see the numbers of investments in Black founders go back and forth versus steadily increasing or remaining consistent,” she told TechCrunch.
Stanard closed an oversubscribed $2.5 million seed round in August and said she received many messages saying it was great that she could close in this climate. “I would think to myself, ‘Are you talking about the potential recession climate or just the everyday climate of raising as a Black woman founder?”
Despite the dismal stats, James Norman, a general partner at Black Ops Ventures, said that, as usual, there is much success to be found in resilience.
“While historically it has not been a clear advantage to lean in on the profitability of your company, in the current market conditions, more than ever, VCs are looking at the potential for companies to become profitable,” he told TechCrunch. “For those Black founders with functional businesses that are scalable, it’s a great time to shine.”
Overall, though, the hopes for Black founders and investors remain unchanged. As Tukes puts it, “I hope future venture capital funding for Black founders matches the cultural impact Black Americans have on American life.”
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