The GHWIN Blog
A Sharp Decline in Funding for Black Founders
In 2023, Black-founded startups in the U.S. raised approximately $705 million in VC funding. While this number might seem significant, it represents a staggering 71% decline from the previous year and the lowest level since 2016. Even more concerning is that this amount accounted for less than 0.5% of the total $140.4 billion in venture funding allocated to U.S.-based startups that year.
Despite a general market downturn, the drop in funding for Black founders was disproportionately severe. While total venture dollars in the U.S. fell by 37% in 2023, the funding for Black-founded startups plummeted by 71%—nearly double the decline of the broader market. This stark contrast underscores the systemic challenges Black entrepreneurs continue to face.
2024: A Continued Downward Trend
The struggles did not end in 2023. In 2024, Black-founded startups secured approximately $730 million in venture capital funding, maintaining a meager 0.4% share of the total VC investments. Although this was a slight increase from 2023’s numbers, it still reflects the persistent lack of access to critical financial resources for Black entrepreneurs.
The situation at the pre-seed level was even more dire. In 2024, startups with Black or African founders received just 0.4% of all pre-seed funding, a steep decline from the 1.1% they received in 2022. This indicates that early-stage Black entrepreneurs are struggling even more to break into the funding ecosystem, limiting their ability to scale and sustain their businesses.
The Broader Implications of Funding Disparities
The limited access to investor capital for Black founders is not just a financial issue—it has broader economic and social consequences. Lack of funding means fewer Black-led startups can grow into scalable businesses, which in turn limits job creation, wealth accumulation, and innovation within Black communities.
Moreover, many Black founders often have to rely on personal savings, family loans, or alternative funding sources, which places them at a financial disadvantage compared to their white counterparts who have more access to VC networks. Without sufficient funding, Black entrepreneurs face higher risks of business failure, stifling economic progress and perpetuating wealth disparities.
How Individual Investors Can Be Part of the Change
Angel investors play a crucial role in bridging the funding gap for Black founders. By investing in early-stage Black-led startups, individual investors can provide the critical capital needed for growth, innovation, and scalability. Supporting Black entrepreneurs isn't just a financial investment—it’s an opportunity to drive meaningful economic change and foster a more inclusive business ecosystem.
If you are an angel investor looking to make a difference, consider:
Allocating funds specifically for Black-founded startups to help close the equity gap.
Joining investor networks that focus on underrepresented entrepreneurs.
Providing mentorship and guidance to Black founders to help them navigate the venture capital landscape.
Advocating for systemic change within investment firms and funding institutions.
Get Involved with GHWIN
If you are an investor, entrepreneur, or advocate looking to support Black founders, consider getting involved with GHWIN. GHWIN is dedicated to providing funding, mentorship, and resources to Black entrepreneurs, helping them navigate the challenges of securing venture capital. Visit GHWIN’s website to learn more about how you can contribute to building a more inclusive investment ecosystem.
The Need for Systemic Change
While there have been efforts to address these disparities—such as diversity-focused funds and initiatives—the numbers indicate that more needs to be done. Investors must actively work to break down barriers in access to capital by implementing equitable funding strategies, increasing transparency in investment decisions, and holding firms accountable for diversity commitments.
Additionally, more mentorship and networking opportunities must be created to connect Black founders with influential investors who can provide both financial support and strategic guidance. The data from 2023 and 2024 highlights that without a significant shift in investment patterns, Black founders will continue to face an uphill battle in securing the capital needed to build and grow their businesses.
Final Thoughts
The statistics from the past two years reinforce what many Black entrepreneurs have long known: securing venture capital remains an arduous challenge. While the broader market has experienced downturns, the impact on Black-founded startups has been disproportionately severe. To create a more equitable business landscape, investors, policymakers, and the startup community must work together to bridge the funding gap and foster an inclusive investment ecosystem.
Black entrepreneurs are innovating, creating, and leading in various industries. It is time the investment world truly supports them in ways that are tangible and transformative. The fight for equitable funding continues, and only with systemic change will we see real progress in closing the racial funding gap in venture capital.
The Struggles of Black Founders Raising Investor Capital: A Hard Look at the Numbers
February 2025
For years, Black entrepreneurs have faced systemic barriers in securing venture capital (VC) funding, and recent data shows that these disparities persist despite calls for more inclusive investment practices. The statistics from 2023 and 2024 paint a sobering picture of the ongoing challenges Black founders encounter when seeking investor support.