LA’s Black, Latine And Women Founders Receive Less Than 5% Of Venture Capital Despite Pledges
A UCLA Luskin School of Public Affairs report found gaps in funding given to Black and Latine founders.
The school tracks investments made by LA-based venture firms connected to the Annenberg Foundation’s Pledge LA initiative.
Pledge LA is a coalition of over 200 venture capital firms and tech companies. Initiated by the Annenberg Foundation and former Mayor Eric Garcetti, the pledge advances access and opportunity for all Angelenos.
Each year, PledgeLA anonymizes funding data and presents it at the regional level, highlighting pain points and areas of success for the LA tech scene.
What did the report find?
This year, Pledge LA reviewed the investment practices of 75 venture capital firms that signed a commitment to increasing diversity, equity and inclusion.
The findings showed that white founders receive a large share of investments compared to previous years.
In 2022, the majority (50%) of companies that received investment from a PledgeLA VC were led by an all-white founding team.
For fundraising, the median team led by white founders received a check for $7.5 million in 2022, while the median team led by Black or Latine founders received $3.6 million.
The report also found that VCs with a diversity thesis and those led by people of color are almost twice as likely to invest in Latine and female founders.
They are also four times more likely to invest in Black founders than traditional VC firms but have significantly fewer resources to drive change.
Of the $139 billion invested in 2022 by PledgeLA, only $6.4 billion (4.6%) went to companies with a founder identifying as a woman, Black or Latine.
Additionally, 74% of companies that did receive investment were led by an entirely male founding team, compared to 11% of assets led by all-female teams.
“It’s time to shift the paradigm around backing companies (and funds) led by women and people of color – not as a charitable activity, but as filling long-standing innovation gaps and creating new opportunities that are great for business,” said Noramay Cadena, PledgeLA’s Advisory Committee Member and Managing Partner of Supply Change Capital.
PledgeLA has announced a new regional goal, “50 in 5”, to give 50% of all venture investments to companies led by women, Black and Latine founders by 2028.