June 2020
News
Navigating the Startup Arena as a Founder of Color

The last several weeks have been pervaded by rage and havoc as support for the Black Lives Matter movement reached a crescendo sparking reform talks at the governmental level and the private sector. America’s history of dealing with systemic racial issues are at the forefront of everyone’s minds, and now a new topic needs addressing: breaking through as a startup founder of color.

Despite the gradual diversification of the startup arena experienced in the last couple of years, founders of color are still heavily underrepresented. A report by RateMyInvestor and Diversity VC found that Black founders receive only 1% of all venture capital funding of the nearly 10,000 startup founders they analyzed. Raising capital can be particularly difficult for founders of color not just because they may lack the credit history required by major funding organizations, but rather the institutionalized racial disparities pose unfair challenges.

Minority founders have scarce funding opportunities and even if recognized, their granted capital is minimal. An article citing a Harlem Capital Report in 2018 shows that “just 105 companies with black or Latino founders have raised rounds of $1 million or more since 2000.” According to Founder Institute, the U.S. racial wealth gap is an underlying determinant of success for a startup: “Black founders themselves may have less personal wealth on average, yes; but they also often face greater challenges in the early stages of raising that initial “friends and family” round of capital, common before seeking institutional investment.” A study in 2016 found that:

“at $171,000, the net worth of a typical white family is nearly ten times greater than that of a Black family ($17,150).”

With the reality of such disparity exacerbated by intergenerational mobility of wealth, African Americans face an unparalleled economic disadvantage when it comes to raising capital.

With the U.S. population projected to be a majority-minority by 2044, the venture capital world needs to reflect the changing market. It is time startups were judged for the potential they have to revolutionize their respective industries. It is time founders of color were acknowledged for their ability to successfully compete in the U.S. economy.

Here are a few resources for investors interested in finding talent from founders of color:

1)Clean Tech

https://www.blckvc.com

https://blackandbrownfounders.com

https://opportunityhub.co


2)Agriculture

https://www.blackurbangrowers.org


3)Artificial intelligence

http://www.code2040.org


4)Others

https://www.hbcu.vc

https://www.therunwayproject.org/home

https://www.blackgirlventures.org

https://www.blackgirlscode.com

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