A report, released today, by an Atlanta-based startup incubator focused on Black and Latinx female entrepreneurs found that, while black women founders are still funded at disproportionally low amounts, funding has increased substantially in the past year. The research also showed that the number of black female founders who have raised at least $1 million is growing.
ProjectDiane, a research initiative undertaken by Atlanta’s digitalundivided and supported by JP Morgan Chase, the Kauffman Foundation and the Case Foundation, released its first report in 2016. At that time, the organization identified and examined 88 black female-led startups.
The 2016 report found that 0.2 percent of this population had raised any outside capital at all, despite the fact that black women are the fastest-growing entrepreneurial group in the U.S. Of those that did raise money, the average amount was a mere $36,000. Compare that to the $1.3 million raised by the average tech startup in general, and you can see how these statistics were disheartening.
Only 12 of the startups identified in 2016 had raised more than $1 million. The report also noted a lower number of black female founders in top startup accelerator programs.
In a blog following the first report, digitalundivided CEO and Managing Director Kathryn Finney noted that the lack of diversity in tech companies — a well-documented phenomenon in Silicon Valley and nationwide — contributed to the lower numbers of funded diverse founders.
But, in the years since that first report, the conversation has begun to shift. Public policy leaders, the media and consumers have put pressure on tech companies to address the very real lack of racial diversity in hiring and promotion policies. More companies, such as Microsoft and Pandora, have formalized policies around committing to seek diversity during recruiting or require candidates of color to be in the running for executive positions.
Startup accelerators have also taken note. Y Combinator publicly disclosed the percentages of underrepresented founders in their 2017 program — 6 percent of companies had a black founder and 5 percent a Latinx founder. 500 Startups has held Unity and Inclusion Summits discussing diversity issues in cities across the country. These efforts are indicative that this issue is being more broadly recognized.
That recognition was reflected in ProjectDiane’s updated 2018 report, which showed that the number of identified black women-led startups has more than doubled since 2016. Moreover, the amount of funding raised by black women founders increased from $50 million in 2016 to $250 million in 2017.
While that’s still a tiny fraction of the over $84 billion total venture capital funding raised in 2017, the 500 percent increase is certainly worth noting. In fact, ProjectDiane cites that since 2009, $289 million has been raised in total by black women founders. That means that approximately 87 percent of the funding over the past nine years was raised in the last year.
Moreover, the number of black women founders who have raised $1 million or more shows significant progress — 12 in 2015 has now almost tripled to 34 in 2017.
This report does not by any means indicate that efforts thus far by tech companies, investors, policy leaders or the public to equalize opportunity have reached their potential — the percentage of funded black female-led tech startups as compared to all startups is still statistically zero (0.0006 percent). The report also shows that almost half of the black female-led startups identified were in just two states, New York and California.
In fact, multiple states in the Southeast (North Carolina, South Carolina, Alabama, Kentucky and Tennessee) identified one or zero black female-led startups and $0 raised. Georgia fared the best in the region, with 18 identified entrepreneurs having raised over $10 million.
However, ProjectDiane does show that the increased attention placed on this issue can generate tangible results.
“Women of color are the fastest growing segment of entrepreneurs,” said Janis Bowdler, President of the JPMorgan Chase Foundation, in a statement. “While some progress has been made, ProjectDiane underscores the economic opportunity left on the table when good ideas and small businesses led by women of color do not get the resources they deserve.”
Featured image via WOCInTechChat.com. Inline graphic via digitalundivided’s ProjectDiane