The announcement that the Fearless Fund would close a grant contest for Black women business owners, as part of a settlement in a lawsuit alleging discrimination, served to highlight the ongoing challenges Black founders face in securing venture capital. This comes after a particularly difficult year in 2023, and the first half of 2024 does not appear to offer much improvement.
In the first six months of 2024, Black-founded U.S. startups received a mere $228 million in funding. This figure represents approximately 0.3% of the nearly $79 billion that went to all U.S.-based startups during the same period. This dollar amount is also a significant 60% decrease compared to the first half of the previous year.
While the $228 million figure does represent an improvement from the second half of 2023, when only $123 million was raised by Black-founded startups, Q2 of this year saw a particularly low $76 million raised. This is the lowest quarterly amount since Q3 of last year, which saw only $47 million in funding for these startups.
Sharp Decline
Last year, venture funding to Black-founded U.S. startups fell sharply, totaling only $699 million. This was the first time since 2016 that the figure failed to reach $1 billion, according to Crunchbase data. This sharp decline stands in stark contrast to the recent past. In 2021, Black-founded U.S. startups secured $4.5 billion, followed by another $2.5 billion in 2022. While those years represented record highs, it’s also important to note that those figures represented more than 1% of the total funding for U.S. startups during those years – a substantial increase compared to current trends.
Deal flow has also decreased significantly. In Q2 of 2024, Black-founded U.S. startups saw only 28 funding deals, the lowest total for any quarter since at least 2019. The 66 total deals completed in the first half of 2024 also mark the lowest total for any six-month period since at least 2019. This represents a 53% drop in deals compared to the first half of 2023.
No single round topped $25 million during the first months of 2024. To provide some context, 22 U.S.-based startups each raised more than $25 million in just one recent week alone.
The largest rounds of the first half of the year for Black founders, according to Crunchbase, include:
- FlutterFlow, a low-code, visual application development platform based in Mountain View, California, raised a $25.5 million Series A round led by Google Ventures.
- FinQuery, an Atlanta-based platform that offers transparency into financial contracts, leases, and software agreements, secured a $25 million round led by Periphas Capital.
- Campus, a Sacramento, California-based edtech startup, secured a $23 million Series A round led by Founders Fund.
Even Less
Even though the funding totals for Black founders were low in the previous year, the current pace suggests 2024 will set a new low for funding in the past decade or so. Last year, Black founders did not reach $1 billion in total funding. However, at the current rate, they are on track to raise less than half a billion dollars this year. In fact, the combined funding for Black founders in the second half of last year and the first half of this year totals only $351 million.
While a few large funding rounds in the second half of the year could shift the numbers, such rounds seem unlikely given the slow rate of deal flow. The challenges faced by Black founders in securing venture capital continue to raise concerns about equity and accessibility in the startup ecosystem.
Methodology
The data in this report comes directly from Crunchbase and is based on reported data from Diversity Spotlight partners, venture partners, the community network, and news sources. This report focuses on the U.S. market for underrepresented minorities, specifically Black-/African-American-founded companies.
The Crunchbase dataset is constantly being updated and is known to have gaps. Some companies may not list founders, or the Diversity Spotlight data may not be current on a company’s Crunchbase profile. Crunchbase acknowledges missing companies, particularly in the early funding stages. If data is missing, contact spotlight@crunchbase.com or update the company’s Diversity Spotlight tags directly on-site using a company email.
Crunchbase, like other databases of private-market transactions, has a documented pattern of reporting delays. The 2023 data will increase over time as more data is added. Some of the numbers in this report may shift as the data is updated.
