Black and Latinx tech startup founders have made almost no progress in securing venture capital (VC) funding over the past seven years in the US, a Crunchbase study released today found. During that period, startups helmed by Black and Latinx founders received just 2.4% of VC investments; so far this year, that figure is slightly higher at 2.6%.
Reasons cited for the persistent low percentage derive from the greater poverty among those groups relative to the White population. Black and Latinx would-be founders have much less access to their own seed capital and to resources from family and community members to launch their firms, yet such “bootstrapping” is considered an essential first step before investors will join in. And they often lack the professional or college networks that can be crucial to connecting with initial “angel” investors or to the venture capital community that typically funds later rounds.