Crunchbase Venture Capital Report on Low Funding for Black Startups

Black-founded startups have seen record amounts of investment recently, with quarterly funding commitments approaching or even topping $1 billion. but according to New data from CrunchbaseVC funding has dropped significantly in the second quarter of 2022 to just $324 million.

  • Only 100 Startups with Black Founders have received $100 million in seed rounds, $591 million in early-stage rounds and about $876 million in subsequent rounds.

  • Startups with at least one black founder received 1.9% of deal counts and 1.2% of total venture dollar investments in the US so far this year.

It comes on the heels of a relatively strong streak for black entrepreneurs. Since the first quarter of 2021, VC funds have invested at least $866 million in black startups. These companies have since seen a peak investment of $1.2 billion in three separate quarters, most recently in the first quarter of 2022.

But it all came crashing down this quarter, with investments reaching only 27% of the level seen at the start of the year. The total number of deals has also come down from a peak of 119 in the first quarter of 2021 to just 35 in this quarter. Total investments are down at any point since the fall of 2020.

Black-founded startups aren’t the only ones being overlooked. VC funding to women-founded firms, and especially to entrepreneurs of color, has also declined in recent years, despite the massive influx of VC money. In 2021, the global venture capital investment total $643 billion, an increase of 92% compared to a year ago. Women entrepreneurs have seen only a small portion of this funding. less than 3% In 2019 VC funding went to women entrepreneurs. For black women, the numbers are even worse; they received just 0.64% of total venture capital fundingAccording to Project Diane.

It’s not clear why VC investments have dropped so hard this quarter, or whether the drop-off will continue. Either way, the steep decline from the highs of Q1 2021 and Q1 2022 will be difficult to stomach. Black-founded startups may be left wondering if the cash-rich five quarters starting in 2021 were just a fluke.

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