The State of Venture Capital Funding for Marginalized Groups

This article examines the persistent challenges faced by marginalized founders seeking venture capital funding, highlighting trends and disparities across different groups.

• While 2021 saw a record high in venture capital funding for Black founders, this trend has significantly declined since then.
• Women founders have seen consistent funding levels around 2% in recent years. However, mixed-gender teams tend to receive more significant investments, suggesting that women founders may need male co-founders to secure larger checks.

Challenges for Black Founders Seeking Venture Capital

Despite promises made after the murder of George Floyd to increase support for Black entrepreneurs, the reality is a decline in venture capital funding for Black founders.

• In 2022, Black founders in the U.S. received only 0.48% of all venture capital funding, representing $661 million out of $136 billion.
• Experts continue to advocate for more opportunities, funding, trust, and reduced bias within the venture capital ecosystem to address the persistent challenges faced by Black founders.

Funding Trends for Women Founders

Funding for women founders has remained relatively stagnant, with mixed-gender teams experiencing an increase in investment opportunities.

• While solo women founders face more challenges securing venture capital, funding for mixed-gender teams has been on the rise.
• Despite some fluctuations, the overall landscape for solo women founders seeking funding has not significantly changed.

Funding Disparities Beyond Black and Women Founders

While Black and women founders are often at the forefront of the discussion, other marginalized groups also face barriers to accessing venture capital.

• Latino founders also face challenges securing capital, with funding levels often comparable to those of Black founders.
• LGBTQ+ founders also encounter unique challenges, and Crunchbase has begun tracking venture capital funding allocated to this group to gain a better understanding of their experience.

The Global Perspective on Venture Capital for Marginalized Groups

Challenges faced by marginalized founders are not limited to the United States. Women and people of color across Europe also share stories of difficulties securing funding.

• Despite the disparities within their own countries, many marginalized European founders still aspire to enter the U.S. market, recognizing the potential opportunities and challenges present there.