A new data analysis by The Plug found that eight out of ten Black women with venture backing are funded for software, enterprise tech, health tech, and other technically-focused ventures, while two in 10 are backed for retail, beauty, clothing, or social network companies.
The data, provided by The Black Founders List and Visible Figures, an organization for Black women founders who have raised over $1 million in funding, revealed the vast majority of funded Black women founders are creating solutions across industries, dispelling the notion that they are being pigeon-holed into lifestyle companies, presenting an alternative to the ghettoization of funding.
James Norman, CEO, and co-founder of video analysis and insight software Pilot.ly, and Yonas Beshwared, CEO and co-founder of StackShare, a platform that allows engineers to track tech stacks being used across their company are co-creators of The Black Founders List. The list is comprised of 340 companies, 103 of which are owned by women. Black women secured 0.27% of venture funding in 2019
Black founders overall received less than 1% of venture funding last year, a clear indication that there is a pattern of VCs missing out on Black founders as a whole. Norman, who authored a guide to investing in Black founders, found that the problems Black founders solve aren’t necessarily on the majority-white-male investor‘s radar.
Black founders may also have network and resource gaps that lessen the likelihood of accessing the venture capital community. Norman notes a difference in cultural communication can lead to misunderstandings and the ever-present threat of unconscious bias coming to play on funding decisions.
These barriers may cut perfectly investable Black-led companies out of the funding equation for traditional VCs.
Black women are underrepresented in companies that provide tech-based solutions so much so that the biggest tech companies have set ambitious goals around increasing underrepresented groups among their leadership.
Funding to Black women founders may be sparse but it’s the most technical of solutions that tend to get backed.