How much VC money has gone to Black investors, startups

2023-03-07

Illustration: Shoshana Gordon/Axios

Over the last several years, the venture capital industry has made countless pledges about hiring and funding more Black investors and entrepreneurs. However, venture dollars under Black management remain small.

By the numbers: Of the U.S. venture assets under management (about $1.42 trillion) in 2020, a slim 1% worth of capital was managed by Black investors, according to data compiled by Harvard Business professor Paul Gompers and Cleo Capital managing director Sarah Kunst.

And looking at gender, 99.97% of total capital under management by Black VCs was controlled by men, while women only managed 0.03%.
The data focuses on senior investors (general partners and similar titles) who have check-writing authority.

Why it matters: The business world is often quick to respond to criticism about lack of diversity with public relations, so looking at the actual dollars an investor manages is a reality check.

What they’re saying: “I knew the numbers would be bad but they’re worse than I thought, particularly the delta between genders for Black and Asian VCs,” Kunst tells Axios via email.

“There’s so much work to be done to support Black and Asian women to reach even where their Black and Asian male peers are, much less population parity,” she adds.
Looking at the intersection of race and gender is often forgotten when organizations rush to pad their demographic numbers.

Between the lines: The data also helps dispel some of the appearances of high diversity created by firms that hired Black and other people of color for junior and non-investment positions.

Getting hired in a junior investing position, only to be passed over for promotions, is a common experience, women of color in VC have previously told Axios.

Moreover, "The idea that if you recruit into VC only from top schools and employers, you'll end up with less diversity naturally is proven false," says Kunst.

Proponents of diversifying VC's ranks (and more broadly, tech) have long pushed for firms to widen where they look for candidates. But Kunst argues that the industry isn't even matching the demographic trends of these elite institutions.

"You could recruit only from that pool and still have much more diversity than we currently see in the field. The pipeline is full, people just aren't backing diverse populations," she adds.

While she expected the data for Black investors to be abysmal, Kunst says she was surprised to see the disparity in venture assets under management between men and women of Asian descent.

By the numbers: Of the total assets under management by VCs of Asian descent in 2020, 84.2% were managed by men, while only 15.8% were by women.

Of note: Kunst also points out the importance of finally having more granular data about Hispanic VCs.

While they're also vastly underrepresented in the industry, gathering data can be harder for researchers because it's more dependent on investors self-identifying, she explains.
Of the total assets under management by Hispanic VCs in 2020, 77% were managed by men, while only 23% were by women.

What's next: Kunst says that they're in the process of updating the data with 2021 figures, and she expects that these trends will only get more accentuated when they get to 2022.

"When times are good, women and people of color get a small stool at the table, and when times are lean, we're often left standing holding the bag."

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