January 11, 2023

Black Founders Are Slowly Getting More Funding But It’s Still Not Enough

New data has revealed that there has been an uptick in the amount of capital funding Black founders in the U.S. raised in Q4 of 2022.

Although this shows that the tide may finally be turning, founders have yet to receive adequate funding to scale their businesses successfully.  

According to Crunchbase, Black startup founders raised around $264 million out of the $33.6 billion allocated in Q4 of 2022. 

This may seem small, but a slight increase from the $178 million raised from July to September 2022. 

What did last year look like? 

To understand what this truly means, let’s look at what funding last year looked like for Black founders. 

In the early half of 2022, Black founders received a staggering $1.2 billion in VC funding. Although these figures can’t compare to the unbeaten numbers raised in 2021, funding was still tracking above target. 

However, as the economic downturn has continued to sink in, funding received by Black founders has also taken a hard hit. 

Many founders have received significantly less, raising approximately $324 million in VC funding. 

In total, Black founders in the U.S. raised approximately 1% – $2 billion – out of the $215.9 billion allocated to them last year, a small decrease from 1.3% the year before.

How are Black founders reacting to the news? 

The recent figures by Crunchbase have left many Black founders disappointed yet again. 

Many Black founders have taken to Twitter to express their frustration in response to the news. The main talking point is that no matter what, “these figures barely ever move,” despite an increase in capital injected into the markets. As usual, Black people are still seeing the short end of the stick. 

Kunmi, Founder of Kamari, said in a tweet, “It’s no secret that Black founders face significant barriers to getting funding for their startups [and] there are a number of reasons for this disparity.” 

“One is the lack of diversity within the venture capital industry itself. Many VC firms are run by white men, who may be more likely to fund startups founded by people who look like them. It’s also worth noting that unconscious bias can play a role in funding decisions. VCs may be more likely to fund startups founded by people who fit their stereotype,” he added. 

Read: Solo Ceesay On Why Venture Diversity Initiatives Continue to Fall Short

American politician Michael Tubbs also chimed in on the conversation, “This isn’t progress,” he said. “We are missing out on amazing founders and brilliant ideas because of structural racism and bias.”   

A quick Google search will show that VCs still fund primarily white male entrepreneurs based in Silicon Valley. Unfortunately, these same investors are yet to address the societal prejudice Black founders face, which puts them in a difficult position. 

So, although the slight uptick is good news for Black founders, is this really a sign of improvement? 

Kumba Kpakima

Kumba Kpakima is a reporter at POCIT. A documentary about the knife crime epidemic in the UK got her a nomination for the UK's #30toWatch Young Journalists of the Year.