Only 40 Black founders raised venture capital (VC) funding in the fourth quarter of 2020, reveals a new study by diversity recruiting platform Hallo.
The study found that of the 1,537 start-ups to receive funding, only 40 were led by Black founders. Black Founder Funding Q4 2020 is Hallo’s second quarterly report for its Black Founder Funding series, which aims to track the funding raised by startups led by Black founders. The latest report analysed 1,537 companies that raised between $1,000,000 and $50,000,000 in funding (between 1 October 2020 and 31 December 2020). The companies combined raised $12,368,156,928 last quarter; however, just $260,844,766 of the total was invested in Black founder-led startups.
Hallo’s first report revealed that of the 1,300 global startups raising funding in Q3 of 2020, only 31 had Black founders. Although many venture capital firms have acknowledged the lack of funding and financial support for Black people, since last year’s protests against racial injustice, fewer than 1% of founders who receive funding are Black. Yet they make up over 13% of the US population.
EQUAL FUNDING OPPORTUNITIES
Despite companies making pledges to fix this issue, Black-owned start-ups are failing to get the support/funding they need to survive. “For those VC’s who simply posted their we stand in solidarity‘ message across social media back in June, yet haven’t taken any meaningful action to back Black founders, you should be ashamed of yourselves,” remarked Hallo’s Founder and CEO, Vern Howard. “The Black founder community doesn’t need VCs to just say they stand in solidarity. What we need is for you to stop talking, start listening, and start investing and supporting Black founders. That’s the only thing that will truly move the needle in creating equal funding opportunities.”
Howard said he created this report to create a benchmark to show what progress is being made towards fulfilling those promises and pledges made by firms since last summer. He confirmed that he plans to continue publishing these reports every quarter. “Our objective here is to keep a pulse on progress being made, so we can ensure that all the awareness and momentum that was built last year doesn’t slowly fade away,” he added.
Additionally, failing to invest in businesses founded by diverse entrepreneurs, means that venture capitalists are missing out on a trillion-dollar opportunity. Click here to read more.
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