Black History Perspective on Confronting Disparities in Tech

As a Black American, Black History Month brings forth many mixed emotions. For me, there are feelings of pride and inspiration as I dive into our country’s rich heritage and the foundational role Black people played in nearly every aspect of American history. But there’s also a sense of frustration with the influx of performative initiatives that distract from very real systemic issues our country is facing.

As a Black startup founder well into my entrepreneurial journey, this month highlights both the disparity in access to capital many of my peers in the startup world face, but also their tremendous achievements, even when the odds of success are stacked against us.

In 2021, Black founders received just 1% of all venture capital in the U.S., with Black women being the most underfunded demographic at just 0.34%. Not only are these statistics problematic, to a Black founder pursuing their vision, but it can also be overwhelming and disheartening. There is no statistical evidence indicating that Black founders underperform in comparison to other founders, so why is there a statistically significant disparity in funding? The short answer is: venture capital is still largely relational and is driven by human beings. Human beings are filled with many unconscious, subconscious, and conscious biases that dictate who has access to what capital. When venture capital is largely controlled by men and non-BIPOC individuals, you have dense layers of biases in the funding decision-making process.

Another key factor in this disparity is that Black founders usually raise their first dollars from Black investors. However, Black investors make up only 3% of all venture capitalists in the U.S. This statistic at a minimum highlights asymmetry on the supply side of the Black founder venture capital demand but also emphasizes another critical disparity affecting Black startup founders today.

There’s also the “friends and family round” problem. Starting any business requires some costs. How much money a founder can access in the “napkin idea” stage of their business can affect how far a company moves in a short period of time. How far a company moves directly impacts how appetizing its venture is to institutional investors. When Black founders on average have $35,000 to start their businesses and White founders on average start with $106,000, it becomes easier to see why this disparity in institutional venture funding is high.

Against these odds, Black founders continue to make history every day in the tech world. One story to follow is Tope Awotona, founder of Calendly. Tope will tell you that his founder journey is an unconventional one, filled with many challenges. While his company started in 2010 (13 years ago), his entrepreneurial journey started 10 years before that. The 2020 Covid19 pandemic took his then 11-year-old startup to new heights at a time when the company was primarily funded by his own life savings and a small pre-seed round in 2014. Calendly is now worth $3B+ and is the first-ever Black-owned Unicorn. While Calendly’s success appears to be “overnight,” Tope’s journey was 20+ years in the making with two previously failed startups and 11 years with limited funding.

This Black History Month, I challenge all readers to find one way to support a Black startup. Follow their social media, become a customer, and send them an email asking how you can help or what introductions they need. There are more Tope’s bound to make history this year and in the years to come, but it’s our collective duty to mitigate disparities when and where we can.

Happy Black History Month!

Posted in Venture Capital, Diversity, Equity & Inclusion, Entrepreneurship