From the Newsletter: Where Is VC Headed And Does It Matter To Bootstrapped Black Founders?

Key Insights

  • Black-led companies in some industries are more likely to have bootstrapped founders than founders who have raised venture capital. 
  • The venture capital industry hasn’t left many Black founders with a choice to bootstrap but rather made it a necessity.
  • Only five percent of all U.S. companies launch with venture capital.

Last week an analysis that referenced Black founders left to bootstrap their operations was published, enlivening questions around the funding disparities in venture capital. The analysis examines the ways bootstrapping a business can be a privilege rather than a necessity, but nods to which category Black founders tend to find themselves in.

As the end of the year approaches we’ll no doubt be tallying how much Black founders did or didn’t get this year, as we did last year and the year before. 

While measuring this figure is helpful and can hold the venture capital community accountable for diversifying who gets funded, are we asking the right questions of this data?

The ‘how much’ question is a take that seems to get more airtime rather than the ‘why’ question. 

Beyond switching the analytical lens we use to measure Black founder’s progress in gaining venture capital from quantitative to qualitative, business publications that track Black venture dollars will do well to further contextualize this rather small avenue for capitalizing a company. 

In the U.S. around five percent of companies launch with venture capital, among them are an even smaller subset of Black-led companies. A lot of talk and commitments have been pledged to change this recently, but the tallies that are coming will tell part of the story. 

Reexamining the funding disparity issue through a wider lens could help make a way for Black founders who go the venture route as others explore more alternative funding channels and of course bootstrapping.

The staying power of the contestable racial equity movement is in flux, but it at least made venture capital question what it owns Black founders. 

Perhaps once those 2022 figures are released we’ll have an answer.

Monica Melton

Monica Melton is the managing editor of The Plug Insights. She previously covered innovation, technology, and venture capital at Forbes. She has also covered politics at POLITICO, entertainment for Time Out New York, but her most fascinating beat has been covering the intersection of technology, finance, and entrepreneurship. She is an alumna of CUNY Graduate School of Journalism and the University of Washington.