Black women are one of the fastest-growing groups of entrepreneurs in the country and this current is reflected in the Black Tech Effect 2023, The Plug’s latest report analyzing 100 high-growth, Black-led technology companies. Black women founded nearly one-third of the companies featured in the report.
Between 2014 and 2019, the percentage of Black women-founded companies increased by 50 percent, compared to nine percent for overall businesses. This growth is not without its challenges though — 61 percent of Black women self-fund their startup capital, and this often does not offset the economic challenges of scaling a business. Black women founders who apply for funding have a rejection rate three times higher than white founders.
Despite funding challenges, Black women founders are paving the way and creating innovative products and systems to advance the economy. The women founders highlighted in the Black Tech Effect lead companies across 15 verticals, the majority including artificial intelligence, clean tech, ed tech and fintech. Some of these companies include AllHere, CEEK, Goalsetter and Mercaris.
In 2020, the number of Black women who raised over $1 million in outside venture funding grew to 93, according to ProjectDiane. But the majority still raise less than the average venture-backed startup. For Black women who have not raised over $1 million, the median seed round is $125,000, compared to $2.5 million for the national median seed round funding for a startup.
The Black Tech Effect aims to shift narratives of Black tech companies from a deficit lens to an empowered one, reimagining the current state of tech. For that reason, it looks not just at a company’s total funding and years in operation, but their social impact as well. These are four of the women founders featured in the report:
Founded by Joanna Smith-Griffin in 2015, AllHere combines conversational AI and interactive nudges to foster attendance and engagement in K-12 education. The platform was originally developed to address chronic absenteeism that Smith-Griffin saw firsthand as an educator; it has since evolved into a 24/7 chatbot.
“How could I teach my students if they weren’t in school? At the time, so much of what teachers were asked to do to address attendance issues was not scalable and difficult to implement,” Smith-Griffin told The Plug.
“Soon, we realized that families, schools, districts and state departments of education wanted to use AllHere as much more than an attendance intervention tool,” she said.
AllHere has raised $12.1 million to date. Smith-Griffin advises other founders in education tech to remember their why, build a community of mentors and advisors, and focus on what they can control.
“Build a business case that clients and, by extension, investors can’t ignore, learn from mistakes and always seek to grow the best business that you can,” she said. “Focusing on your company’s fundamentals will attract the right partners to get your business further, faster.”
Founded by Mary Spio in 2016, CEEK is a mobile VR app that directly connects artists and content creators to their fans through VR concerts, NFTs and unique experiences in virtual worlds.
Spio was inspired to develop CEEK after feeling like there was no media consumption in an immersive format outside of gaming.
“As I started building the platform, I realized that there were so many challenges to being able to distribute content in the metaverse and that there was no way that the metaverse will be scalable if we didn’t create an app that was as simple as posting to YouTube or Instagram,” Spio told The Plug.
Also a space engineer and U.S. Air Force veteran, Spio has raised over $10 million, crediting the Black Star Fund as being instrumental in CEEK’s capital raise.
“We have some of these huge enterprises like Microsoft, like Meta that are depending on things that we’re building in order for them to be able to scale. They’ve supported us, and yet, the funding journey has not been easy. It hasn’t been straightforward. It’s been very challenging,” she said.
Artists, influencers, brands and the like are looking to carve a space in the metaverse as Web3 and the creator economy are growing.
“Our whole focus is in providing the ability for creators to directly connect to their fans in the metaverse. You control how your fans consume your content, when they pay. Most people would rather have less views and get paid for all of that than have a ton of views and not get paid for it at all because you have highly talented creators that have massive audiences that they’re not monetizing,” Spio said.
Founded by Tanya Van Court in 2016, Goalsetter is an app that provides a savings, spending and investing platform for families that is anchored by and centered around game-based financial education videos and quizzes. The platform provides users with an FDIC-insured savings account and the Mastercard Cashola teen and tween debit card that include parental controls.
In the last year, Goalsetter has changed its business model from B2B to B2B2C by partnering with banks and financial institutions. Likening to how the popularity of streaming services among young people has disrupted the cable industry, Van Court explained the importance of cultivating future customers.
“What became clear to me is there were a lot of teen and tween debit card platforms that were taking the next generation of the banking industry’s customers, and they were taking them because they were pouring millions of dollars into marketing. They were getting to them earlier and they were paying attention to a customer base that banks and financial institutions had for a long time not really paid attention to,” Van Court told The Plug.
The platform’s funding journey is what Van Court calls a “sad testament to America.” When she pitched Goalsetter to VCs she was told kid’s fintech is not VC-backable.
“But when white men entered the market after us, and in many instances years after us and with no product, when we had a really good product, those same VCs started to pour millions of dollars into those white male-led companies,” she said.
When Van Court questioned the discrepancy, she was told she now had well-funded competitors. It wasn’t until after the murder of George Floyd that she saw a shift in funding as companies pledged to invest in Black-owned businesses. Black leaders like billionaire philanthropist Robert F. Smith and NBA player Kevin Durant invested in Goalsetter, paving the way for companies like MasterCard, U.S. Bank and PNC to follow suit.
To date, Goalsetter has raised $20 million, while one of its competitors has raised $600 million. Van Court credits the resilience and strength of Black founders for guiding her through six years of raising funds — and still, 88 percent of the first million came from Black and brown people and women.
“We are constantly operating out of a dearth of resources when other people are given a plethora of resources to solve the same problems and yet we are still innovating and creating solutions that this industry has never seen before and this country has never seen before,” she said.
Founded by Kellee James in 2012, Mercaris supports the growth of sustainable agriculture by providing market intelligence for organic and non-GMO commodities and an online trading platform for buyers and sellers.
Thirty years ago the milk aisle at local grocery stores looked a lot different than the array of options today. According to James, Mercaris uses technology to understand markets like this so its customers can make better business decisions.
“I’ve always worked in sectors that fuel the foundations of civilization: food, energy, water, air. And we know that agriculture is super important, we know with climate change underway we need to find a more sustainable way to produce food and energy,” James told The Plug.
“Organic is one of the mechanisms to do that, so my view is that anything that helps to take down barriers for growth for those sustainable sectors is a good use of time and capital,” she said.
Having worked in the agricultural technology industry for the last decade, James said she has seen growth in the supply and demand of sustainably grown products.
“You still have holdouts and skeptics, but I think more and more the world is moving on and saying, ‘This is happening, so how do we do it well, more efficiently and more profitably,’” she said.
Although Mercaris has raised $9 million in venture capital, James said that other founders in agtech should be aware VC isn’t always the best route as farming can be slow adoption and capital intensive.
Editor’s note: One of Mercaris’ funders is Pierre Omidyar, co-founder of Omidyar Network. The Black Tech Effect 2023 report was developed in partnership with The Tech We Want, a program of Omidyar Network.