September 2, 2022

Investments In Chicago’s BIPOC Startups Have Slowed Down

A new Chicago Business Bulletin report has revealed that not enough has been done to support Black and Latinx startups. 

Compared to other top startup ecosystems, Chicago has higher share capital deals. Additionally, Chicago leads significant startup ecosystems in the share of venture capital funding garnered by underrepresented founders. 

Since 2019, 5.1% of Black and Latino-founded companies have participated in a venture capital deal, compared to 2.5% nationally. 

“This report is intended to raise awareness of the strategic movement underway in Chicago to drive greater, more equitable investment by and among VCs and our city’s incredibly innovative diverse founders,” said Michael Fassnacht, President & CEO, World Business Chicago, Chief Marketing Officer, City of Chicago. 

“While we have seen some progress over the last couple of years, we still have a long way to go.” 

According to the data, the proportion of startups with BIPOC women founders that raised venture capital has risen by 23.3% this year, which is significantly higher than in previous years.

However, only three Black-founded startups have received VC deals exceeding $10 million since 2019. In sum, underrepresented founders account for a small slice of venture capital and private equity throughout the US, meaning Black entrepreneurs still face countless challenges when accessing capital.  

Chicago’s Black-founded startups now have a larger median deal size than all companies raising venture capital. 

As a result, Chicago-based founders are launching their funds with equity-focused investment theses to help diversify the investment world. 

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.