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Black female startup founders raise less funding than white male founders whose startups failed

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Reuters/Albert Gea
Visitors rest inside a bubble at the terrace during the Mobile World Congress in Barcelona, February 26, 2014. REUTERS/Albert Gea (SPAIN – Tags: BUSINESS TELECOMS…
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It’s no secret that Silicon Valley has a diversity problem: women, black people, and Latinos are all embarrassingly underrepresented in the tech industry. A new study makes that abundantly clear, at least in terms of where the venture capital dollars are going: startups led by black female founders raise significantly less outside funding than the average failed startup.

Black female founders comprised less than one percent—.002%, to be exact—of all venture deals from 2012 to 2014, according to a research study published this week (pdf) from investment firm digitalundivided. The group looked at 378 reader-submitted businesses and identified 88 that met the definition of a startup led by black women. Those black female founders raised $36,000 on average from outside sources. On the other hand, the average startup that ultimately fails (and is usually led by white men) raised about $1.3 million.

In their report, digitalundivided calls black female founders “the real unicorns of tech,” and found that only 11 black women-led startups out of 88 have raised more than $1 million (pdf, pg. 6) in outside funding, including second-hand furniture marketplace AptDeco. It’s a spotlight on a growing group of entrepreneurs—but the report notes that more than half of the black female founders in their report may be tapping into other resources, like personal savings accounts, to fund their companies.

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