Black women and Latina entrepreneurs get less than 1% of venture capital

Combined, Black women and Latinas make up less than 1% of all venture capital investment, according to the new ProjectDiane study from the group digitalundivided.

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Lauren Maillian, CEO of digitalundivided.

Lauren Maillian, CEO of digitalundivided.


Black women and Latinas are raising more venture capital funding than ever, tapping into Silicon Valley’s wealth-generating machine amid the nation’s racial reckoning, but funding parity is still a pipe dream for women of color, according to a new report.

“We have seen the number increase but not enough,” said Lauren Maillian, chief executive officer of of digitalundivided, which put out the report.

Black women-founded companies raised about $700 million in funding from 2018-2019, a significant increase from the previous two-year period, yet still account for only 0.27% of the $276.7 billion in venture capital investment, according to the ProjectDiane report from the not-for-profit group, which supports female entrepreneurs of color and, is named for civil rights pioneer Diane Nash. 

Latina-founded companies raised $1.03 billion in the same period, accounting for 0.37% of total venture capital investment during those two years, the report found

Combined, Black women and Latinas make up less than 1% of all venture capital investment. 

ProjectDiane is a biennial demographic study that tracks public funding announcements for Black women and Latina entrepreneurs.

The latest report comes as COVID-19 has had a disproportionate impact on minority-owned businesses. Earlier this year, digitalundivided reported that 82% of Black women founders experienced a pandemic-fueled loss of revenue.

Most Black women and Latina entrepreneurs don’t raise any venture capital at all.

For decades, funders have underestimated and overlooked Black women and Latinas. Research has shown that Black women are among the least likely to get funding from venture capitalists. So few raise venture money that statistically speaking the percentage is nearly zero.

The majority of entrepreneurs who land venture capital funding are white men, much like the financiers who hand it out. Venture capitalists tend to place their bets on people who’ve already succeeded or who remind them of the people who have.

Black women and Latinas face significant roadblocks in Silicon Valley — insular networks, negative stereotypes and overlapping discrimination based on gender and race. 

The first ProjectDiane report, in 2016, found that just 12 startups led by Black women raised more than $1 million in funding. Two years later, nearly triple the number of Black women founders — 34 — had crossed that threshold. The latest report found those ranks had grown to 93 Black women and 90 Latinas.

ProjectDiane draws from a database of about 600 Black women and Latina founders. 

The progress is frustratingly slow for those trying to reverse entrenched patterns of exclusion, but Maillian says that, “for women of color, this has been their year to prove their worth” as more venture capitalists recognize the “cultural relevance” of the companies they are building as momentum to support entrepreneurs of color grows.

At the start of 2018, 34 Black women had raised $1 million or more. In data tracked through this past August, more than 90 Black women had raised that much or more, the new data show.

Raising venture capital is still so tough, many founders rely on workarounds instead, ProjectDiane found.

Of the founders surveyed by digitalundivided, 86% used savings or earnings from current employment to fund their businesses. Other funding sources included support from a spouse or partner (22%), grants (12%) and revenue from other business ventures, accelerators, angel investors and crowdfunding platforms (less than 10% each).

Nearly a quarter of the founders received outside funding from angel investors, crowdfunding and pitch competitions. More than three-quarters haven’t gotten any outside investment, though 60% of them indicated that getting that funding is a goal. 

At this rate, how long will it take for women of color to reach funding parity? Maillian won’t speculate but said: “The conversation around funding parity is not a conversation we have ever had to have because the conversation had always been ‘just fund women of color.’ ”

With the momentum seen in the 2020 ProjectDiane report, she said, “Now, we can begin to look at parity, and it is something we will track.

“I pray,” she said, “it happens in my lifetime.”

Read more at USA Today.

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