It’s confirmed — Black entrepreneurs saw a dramatic decrease in funding this year as investors continue to pull back.
So far, new Crunchbase data shows Black startups received $324 million in VC funds in the second quarter, a steep decrease from the $1.2 billion received in Q1 this year and substantially below the $866 million the founder cohort raised in Q2 last year. Overall, Black founders have received more than $1.5 billion in capital so far this year, compared to the over $2 billion received this time last year. Funding at all levels is tracking below 2021.
Sadly, this isn’t surprising; valuations are falling and deal volume is shrinking this year as investors pull back from 2021’s excesses.
It is not a new concern that in times of economic distress, some investors may retreat to their respective networks to fund what is considered safe and familiar to them — and those networks are often not filled with vast amounts of Black founders.
“People tend to default to what they know and what is safe,” RareBreed Ventures founder McKeever Conwell told TechCrunch. He added that the decrease in funding is concerning but not surprising during this economic downturn. “Investing in founders of color, as we’ve seen over decades of venture capital, is not what is deemed to be the safe thing to do.”
Source: Tech Crunch