Black founders raised $39.7 million out of $29.9 billion of all capital allocated to U.S. startups in Q3 2023, representing a meager 0.13%, according to Crunchbase.
This figure is actually a massive reduction from the same period 1 year back, because in Q3 2022, black founders raised $1 billion out of around $81.7 billion in venture dollars, around 1.2%.
Moreover, $39.7 million represents a substantial decrease when compared to the previous quarter, Q2 2023. In that quarter, black founders secured $212 million out of a total of $29 billion, and in the first quarter (Q1 2023), they raised $352 million out of $45 billion.
“Unfortunately, the venture industry is moving in the wrong direction here,” Gené Teare, the senior data editor at Crunchbase, said in an interview with TechCrunch.
“It may be tempting to blame a larger market correction, but the data tells a different story.”
Teare highlighted that the decline isn’t limited to just the funding amount allocated to black founders; it’s also reflected in the overall percentage of funding, which has reached some of its lowest levels.
“Despite the valiant efforts of many firms and organizations, it’s clear that more work needs to be done to overcome biases in the ecosystem,” she continued.
How Black Founders are Coping
Black founders on the ground gave their comments in interviews with Techcrunch, describing how difficult the situation has been, and some of the strategies they are using to cope or get around the system. This includes Yves Perez, the co-founder of Workbnb, who mentioned that founders were adding AI to their systems to raise funding.
“I watched several black founders suddenly adopt AI to help them raise or drop their valuations significantly so they could get fundraising over with,” he said.
Arian Long, the founder of the period care company, Femly, mentioned that while access to capital has been ‘frequently unattainable’ this year (2023), she and her company navigated this challenge by intensifying their focus on profitability, maintaining a lean operation, utilizing grants, and participating in pitching competitions.
Black founders have also increasingly decided on relying on their own networks, rather than seeking capital from traditional, established players who have become more apparent in their lack of support.
Perez and Tinia Pina, the founder of the agtech company, Re-Nuble, shared that they were able to discover support within their individual networks.
“I am more connected and in touch with investors that are mission and impact-aligned,” Pina said.
“It’s a very conscious community of investors that try to be aware of and eliminate biases such as this.”
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