Twenty years ago, the landscape of angel investing bore scant traces of female presence, with women representing a mere 5% of all angel investors and 3% of funded companies. Fast-forward to 2022, and the scenario has transformed dramatically, with women now accounting for 40% of angel investors and 31% of angel-funded companies.

This shift is not just a numeric increase; it’s a seismic evolution reflecting broader changes in society and the business world.

Our own journey started in 2004 with Golden Seeds, a national angel network that invests exclusively in early-stage companies led by women.

We were met with much skepticism. Yet, our conviction was fueled by two undeniable trends: the burgeoning number of women-led businesses, and the growing capital, skills and networks of women to invest in startups.

Since then, the idea of investing in women-led businesses has gained substantial traction. Golden Seeds’ investments of more than $180 million in nearly 250 companies — which have in total raised an additional $2 billion — stand as a testament to the economic and social impact of women entrepreneurs and investors.

However, declaring success is premature. Despite the progress in seed investing, there is still a major disconnect between the innovation women are leading and the pace at which venture capital is realizing these opportunities.

How is it possible that women can lead half of the new businesses in the U.S. and still more than 80% of VC-funded deals in 2023 went to all-male teams? It’s equal parts baffling and frustrating.

Reflecting on our experiences, including both successes and challenges, we’ve identified meaningful ways the venture capital community can join us in our mission to direct additional capital and other forms of support to women-led startups.

Insights for the venture ecosystem

First, the compelling impact of women’s leadership on company performance cannot be overstated. Research consistently shows that gender-diverse teams and companies led by women outperform their peers financially. Last year, McKinsey reported that companies with gender-diverse executive teams are 39% more likely to achieve financial outperformance.

Similarly, BlackRock found that companies led by women CEOs have almost consistently outperformed those led by men over the past decade. The Impact Group and BCG further solidify this evidence, showing that gender-balanced boardrooms are nearly 20% more likely to improve business outcomes, and businesses founded by women deliver 2.5x higher revenue per dollar invested than those founded by all men.

This data isn’t just numbers — it’s a clear indication that diversity is a strategic advantage.

Second, the venture capital world has often relied on pattern recognition — investing in entrepreneurs who fit a familiar mold, often favoring serial entrepreneurs with a track record of successful exits. This methodology, while comfortable, has led to missed opportunities and overlooked innovation. The bias has inadvertently sidelined some of the most promising ideas, particularly those developed by women and minorities.

Third, the venture ecosystem has traditionally been concentrated on the coasts, overlooking the rich diversity and potential of startups nationwide. In 2022, 44% of funded angel deals occurred outside the traditional VC hubs, indicating a significant pool of untapped potential across the country.

Lastly, the inclusion of more women in decision-making roles within VC firms can drastically alter funding dynamics. Research from Babson College’s Diana Project indicates that when a VC firm includes at least one woman partner, the likelihood of a woman entrepreneur being funded increases by 2x to 3x. Yet, women constitute less than 20% of decision-makers in U.S. VC firms, underscoring a critical area for improvement.

Toward a more inclusive future

After two decades of pioneering investment in women-led startups, we stand at a crossroads where investing in women is not just an emerging trend but a mature movement. Today, with robust data and the cumulative wisdom of years, the impact of women as entrepreneurs and investors is undeniable. Yet, the venture community’s evolution toward gender equity and inclusivity is still ongoing.

To build a better venture ecosystem, what’s needed is not just recognition of past successes but an unwavering commitment to open new pathways for diverse entrepreneurs to access necessary funding and support.

The future of venture capital, infused with the insights and leadership of women, promises not just better outcomes for women entrepreneurs but unparalleled economic growth and innovation for all.

Loretta McCarthy is co-CEO and managing partner of Golden Seeds, an investment organization that invests in women-led startups. At Golden Seeds, she manages the national network of nearly 300 members and has been a frequent speaker domestically and internationally about early-stage investing and women entrepreneurs. Previously, she served as executive vice president and chief marketing officer at OppenheimerFunds and was an executive at the American Express Co. 

Jo Ann Corkran is co-CEO and managing partner of Golden Seeds, where she manages the deal flow and post-investment processes. She is also a general partner of three Golden Seeds venture funds that invest in early-stage companies with gender-diverse management teams.  Previously, Corkran was managing director at Credit Suisse Asset Management, Credit Suisse, and First Boston. She currently serves on the board of directors for Work Truck Solutions, a commercial vehicle inventory and marketing solutions company, and EliseAI, a machine-learning company that uses conversational AI to transform housing and healthcare. 

Illustration: Dom Guzman

Per Crunchbase data, just seven U.S. companies with female founders joined the unicorn club in 2023 and 2024. That’s a precipitous decline from the peak year of 2021, when dozens of female-founded American companies met or exceeded the $1 billion level for the first time, amid a global boom for the category.

Who’s joining the unicorn board

The most recent female-founded addition to the unicorn board is Redwood City, California-based Zum, provider of a student transportation platform used by school districts across the country. The 9-year-old company picked up $140 million in a Series E round in January at a $1.3 billion valuation.

Led by co-founder and CEO Ritu Narayan, Zum tries to help school districts increase efficiencies and reduce the costs of managing bus fleets through its AI-enabled platform. The technology gives districts visibility so they can optimize routes and even deliver real-time updates to parents.

Others include:

• Imbue, a startup that trains foundational models to develop AI agents, landed $200 million in a September Series B round at a valuation of more than $1 billion. The 3-year-old, San Francisco-based company’s co-founder and CEO is Kanjun Qiu.
• Green hydrogen company Ohmium secured $250 million a year ago at a unicorn valuation in a Series C led by TPG Rise Climate. The 5-year-old company, which lists its chief compliance officer, Kirsten Burpee, as a co-founder, designs and manufactures proton exchange membrane electrolyzer systems, which are used to split water through electrolysis to create hydrogen.
• Los Angeles-based Metropolis, a provider of checkout-free parking, raised $1.05 billion in an October Series C, along with $650 million of debt financing. One of its co-founders is Courtney Fukuda, currently serving as chief integration officer.
• San Francisco-based Replit, a developer platform that uses AI to complete code, has raised $222 million in known funding at a valuation of at least $1.2 billion. The 8-year-old company lists Haya Odeh as co-founder and VP of design.
• Adept AI, founded in 2022, has raised $415 million to date at a last reported valuation of at least $1 billion. One of the company’s co-founders is Niki Parmar, who also served as CTO. Parmar is also co-founder of Essential AI, founded last year, which came out of stealth with $56.5 million in funding in December.
• New York-based fertility clinic network Kindbody raised $100 million led by Perceptive Advisors. The company, which plans to expand its clinic footprint, was valued at $1.8 billion. Its founders are Gina Bartasi and Joanne Schneider.

Yes, there’s a lot of AI

Looking at the list above, it’s clear artificial intelligence is a popular core or enabling technology among new, female-founded unicorns.

This isn’t entirely surprising, given that AI is a common theme among all global unicorns minted over the past year. As of late October, 1 in 5 of the new billion-dollar startups to join The Crunchbase Unicorn Board in 2023 were artificial intelligence companies, an analysis of the board shows.

Notably, however, AI is even more highly represented among new female-founded unicorns. Of the seven listed above, three – Adept AI, Replit and Imbue — are essentially pure-play AI technology startups. Two more — Metropolis and Zum — list AI as an enabling technology.

Given the small size of the sample set, it may be wise to avoid drawing too many inferences from the high representation of AI on the list. Clearly, however, it’s safe to say that female founders and executives are playing a leading role in the space. This is evidenced not just by new unicorns but also by more established startups such as Anthropic, which has raised more than $10.3 billion to date with Daniela Amodei taking a lead role as co-founder and president.

More unicorns ahead?

Given the slow pace of creation for new female-founded unicorns in recent quarters, it’s also reasonable to both hope and expect the numbers will improve. After all, last year was a comparatively weak period for venture funding overall.

The contraction was most pronounced for the kinds of large, later-stage rounds that most frequently come with unicorn valuations. As a result, we’re seeing a drop in unicorn creation across the board. Given the cyclical nature of startup investment, it should eventually be due for a pickup.

Illustration: Dom Guzman

Venture funding to Black-founded U.S. startups last year totaled only $705 million — marking the first time since 2016 that the figure failed to even reach $1 billion, Crunchbase data shows.

The decline in capital to Black-founded companies greatly outpaces the overall decline in startup funding. While total venture dollars in the U.S. fell 37% last year, funding to Black-founded startups dropped a staggering 71%, according to Crunchbase data.

Last year’s total investment in Black-founded startups in the U.S. marks the lowest amount since such startups raised only $582 million in 2016. The drop in total dollars also meant Black-founded startups received their lowest share in the venture market since at least 2016, per Crunchbase.

Black-founded startups received less than 0.5% of the $140.4 billion in venture funding all U.S.-based startups received last year.

In 2021, Black-founded startups received 1.4% of all U.S. venture funding. In 2022, it was 1.1%.

“Unfortunately, nothing is really surprising,” said Paul Judge, who along with Marcelo Claure took over the Open Opportunity Fund from SoftBank last year. The fund is dedicated to supporting Black and Latinx founders.

“The fact it is not trending in the right direction is certainly a problem,” he said.

Same old

The numbers stand in stark contrast to what many VC firms and strategic investors promised nearly four years ago when they pledged more diversity in their venture spending after the death of George Floyd.

“At the time people said they would do something, but when there’s a downturn funding always goes back to what it always does,” said Judge, who is also a co-founder of incubation center TechSquare Labs.

When one considers 13% of the U.S. population is Black and more than $140 billion in venture capital was involved in the U.S. last year, it should be reasonable to expect Black funding numbers to be around $18 billion, Judge said.

“Funding was less than $1 billion a year,” he said. “That means we have about a $17 billion problem. People understand money, so they should understand that. Now we need a $17 billion solution.”

Judge added that one way to find that solution is to show the investors the return potential of startups with diverse leadership.

“People just haven’t realized the financial rewards” of investing in startups with diverse leadership, Judge said. “Minority-led companies consistently outperform.”

Judge noted that many minority-led companies excel at what investors are looking for now — cash efficiency and low burn rate. Minority-led companies often can stretch their dollars further and for longer, he said.

In the open fund portfolio, 57% of its companies are Black-founded, and on average they are experiencing 100% revenue growth year to year and have at least two years of runway.

Declining dollars

While the year-to-year numbers are striking, they are even more dramatic when one considers  funding to Black founders totaled $4.9 billion in 2021 — a record year for venture capital spending. Last year’s number represents an astonishing 86% drop from 2021.

All stages were down when it came to funding to Black-founded startups, Crunchbase data shows.

Angel and seed rounds dropped 51% compared to 2022, with only $148 million raised.

Both early-stage and late-stage rounds saw a more pronounced drop. Late-stage rounds fell 73% with $259 million raised, while early-stage rounds plummeted 74% with a paltry $298 million raised.

The late-stage numbers meant a scant 0.3% of all late-stage funding in the U.S. went to Black-founded startups.

Mark Buffington, co-founder of BIP Capital in Atlanta — typically a leading region for funding to Black founders — said that it is hard to conclusively say why the numbers are down. Still, one hypothesis is that some startups funded in the wake of Floyd’s death and subsequent racial justice movement, prompting more VCs to look more into DEI initiatives, may be having a difficult time raising later rounds now, in a tougher market that has never favored Black founders.

“Some of the dynamics that existed downstream (before Floyd) that made it difficult to get funding are still there,” said Buffington, noting the networking needed to help consummate larger rounds.

The numbers seem to bear that out as 82% of all rounds raised by Black-founded startups in the U.S. last year were seed or angel rounds, while only 3% were late-stage fundraisings.

Big rounds dwindle

It is important to note large late-stage growth rounds usually make up the smallest percentage of rounds due to the normally high-dollar value. That also makes them the most difficult to raise.

However, last year saw just one $100 million-plus round by a Black-founded startup in the U.S., and only three rounds of more than $30 million.

For comparison’s sake, last week alone saw seven rounds of $100 million or more raised by U.S.-based startups.

In 2023, the largest rounds to Black-founded startups in the U.S. included:

• San Francisco-based investment management platform Juniper Square raising a $133 million venture round led by Owl Rock.
• Los Angeles-based media firm Macro locked up a $90 million round co-led by BlackRock and HarbourView Equity Partners.
• San Francisco-based Clerkie, developer of an AI financial planning tool for underserved Americans, raised a $33 million Series A led by Left Lane Capital.

Those raises would seem to illustrate the key reason funding to Black-founded startups saw such a dramatic decline — a dearth of large rounds. Without such rounds, funding numbers usually drop as it is difficult for seed and early-stage rounds to make a significant difference.

In 2021 and 2022 for example, there were a total of 17 rounds that went to Black-founded startups that were $100 million or more.

Deal volume plummets

While money talks — and gets people talking — deal volume also paints a poor picture when it comes to Black founders getting funded.

The 173 rounds funded last year — a 48% drop from 2022 — is the lowest deal volume in at least the past eight years. Likewise, both seed/angel and early-stage funding also hit their lowest totals in at least the past eight years.

The shrinking deal volume does not come as a surprise to investors. James Norman, co-founder of Black Operator Ventures, said he sees fewer deals getting done, with most people focusing on reinvesting in current founders who have solvent businesses.

In a down market, “it’s going to seem a lot more extreme on the Black founders, as it is on others, because there’s not as many deals to re-up into that are led by Black founders,” Norman said.

One of the important aspects about deal volume is that if early deal volume drops, that means there will be fewer companies eventually ready to raise larger late-stage growth rounds — which in turn will keep funding levels decreasing.

Of course, that would be consistent with what has gone on the past two years.

Another factor? Consumer startup funding slowdown

Slowing investment to a host of consumer-facing sectors, from e-commerce to the app economy, may be another factor behind the recent contraction in funding to Black-founded startups.

In the past three years, several of the most high-profile and heavily funded startups with Black founders are consumer-facing companies. But most last raised financing more than two years ago.

This includes:

• Scheduling app Calendly, founded by Atlanta entrepreneur Tope Awotona, has raised $350 million to date. But its most recent — and primary — funding round was just over three years ago.
• Lingerie brand Savage X Fenty, launched by pop mogul Rihanna, has raised $310 million to date, with consumer-focused investor L Catterton as a lead backer. However, the El Segundo, California-based company hasn’t raised a known round since its Series C two years ago.
• Cityblock Health, a value-based healthcare provider led by physician and co-founder Toyin Ajayi, is the biggest funding recipient, with $891 million in known equity investment. However, the Brooklyn-based company raised its most recent disclosed-size financing — a $400 million SoftBank-led Series D — in September 2021.

Several other well-funded consumer-facing startups with Black founders have also not secured a fresh round for more than two years. This includes New York-based barbershop app Squire, backyard cottage purveyor Gardena, California’s Cover, and Chipper Cash, a San Francisco-headquartered provider of payment cards and money transfer services in multiple African countries.

Notably, while overall U.S. startup investment fell sharply last year, not all sectors are following the same pattern. Some areas, such as AI, have heated up significantly. Others, like biotech and  robotics, are down but still see significant deal flow.

Meanwhile, a lot of once-hot spaces, like consumer-facing apps and direct-to-consumer e-commerce, have seen much steeper declines. Black-founded companies active in these spaces have not been spared the impact of this broad downturn.

— Joanna Glasner contributed to this article.

Methodology

Funding amounts and counts for the most recent year were collected through Feb. 23, 2024.

The data contained in this report comes directly from Crunchbase, and is based on reported data provided by our Diversity Spotlight partners, venture partners, our community network and news sources. The data in this report is focused on the U.S. market for underrepresented minorities, namely Black-/African-American-founded companies.

Crunchbase’s dataset is constantly expanding, but there are gaps. A company may not have founders listed, or the Diversity Spotlight data may not be updated on its Crunchbase profile. We do believe we are missing companies, especially at the early stages of funding.

If you notice missing data please reach out to spotlight@crunchbase.com or verify with your company email to update your company’s Diversity Spotlight tags directly onsite.

Crunchbase, like all databases of private-market transactions, has a documented pattern of reporting delays. The data for 2023 will increase over time relative to previous years. As data is added to Crunchbase over time, some of the numbers in this report may shift.

Related reading:

• Special Series: VC Dollars To Black Startup Founders Fell More Than 50% In 2022
• Special Series: Black-Founded Startups Raised Large Rounds, Added 3 Unicorns in 2022
• Special Series: Black-Founded Startups Attract Funding By Filling Gaps In Health Care Equity
• Funding To Black Startup Founders Quadrupled In Past Year, But Remains Elusive
• Black Women Still Receive Just A Tiny Fraction Of VC Funding Despite 5-Year High
• Culture, Colleges And Corporations Help Push Georgia To The Top In VC Funding To Black Founders
• Something Ventured: How Black Founders Can Increase Their Chances Of Raising Capital

Illustration: Dom Guzman

A male venture capitalist once said, “I don’t want to talk about vaginas every Monday morning in my partner meeting.”

Although nearly every woman has a vagina, the word itself can be enough to prevent men, the majority of decision-making investors, from investing in vagina-based innovations — or women’s health in general. Female founders received only 1.9% of all venture capital funding in 2022 and female founders of women’s health companies received even less than that.

However, when it comes to innovation and improvements for women, female-led women’s health companies are poised to succeed.

Women are 80% of the health care workforce, make 80% of household health care decisions, and spend 29% more per-capita on health care than men. They live longer, are more likely to have chronic health care conditions, and see health care providers more regularly than men.

They are also more likely than men to experience adverse drug effects, Alzheimer’s, autoimmune disease, osteoporosis and rheumatoid arthritis, among others. Other conditions — such as endometriosis, polycystic ovarian syndrome and pre-eclampsia — affect them exclusively.

Women’s intuition plays a role

Women are so intertwined with health care — as decision-makers, patients and workers — that they have the insight to identify white spaces, drive innovation and understand the direct and indirect costs of ignoring women’s health.

For example, women make up 66% of family caregivers: a role with a $1.5 trillion estimated value in the U.S. and $10.9 trillion globally. Unhealthy women might not have the emotional, mental, or physical abilities to keep those in their care healthy as well, including children, parents, or in-laws.

They also might not be able to work to their full potential, or even work at all: If all paid working women in the United States did not — or could not — work for a single day, the country would lose almost $21 billion in terms of GDP. Yet, women with period pain saw nearly nine days in lost productivity per year while 32% of surveyed women with endometriosis reported missing work. Quantified, the estimated indirect costs of PMS are $4,333 per woman and greater than $15,000 for endometriosis.

Women helping women

The best people to understand, experience and address this need for healthy women are one and the same: women.

Female leadership has already proven its value: Women in leadership or board roles have greater diversity of backgrounds, more innovation patents and citations, improved performance and less corruption than mostly or all–male teams. Women-led companies also had 35% higher ROIs and 63% higher valuations than all-male teams and generated 78 cents of revenue per dollar raised compared to all-male teams’ 31 cents.

Thus, female-led health care companies address an otherwise overlooked market and have successful, skillful leaders at their helm. They have already started to see major successes too: Maven Clinic became the first digital health unicorn focused on women’s health while Elvie, Kindbody and Tia had some of the largest fundraising rounds for women’s health companies ever.

Acquisitions of KaNDy Therapeutics by Bayer, Alydia Health by Organon, Uqora by Pharmavite, and Gennev by Unified Women’s Healthcare show that established companies are recognizing the value of women’s health — and may encourage others to follow. Plus, all these startups were founded and/or are led by women.

While male investors may not want to say the word vagina, their historic lack of focus on and funding for women’s health has created a massive market vacuum. Female leaders, especially those of women’s health companies, can successfully capitalize on this overlooked opportunity and, in the process, improve health outcomes for women everywhere.

 Linda Greub is the co-founder and managing partner of Avestria Ventures, which invests in early-stage women’s health and female-led life science ventures. For 30-plus years, Greub has invested in public and private life science companies as an institutional investor, a corporate M&A executive, a hedge fund analyst, and a private venture investor. She graduated from Yale University and Harvard Business School.

Illustration: Dom Guzman

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Editor’s note: This article is the last of our three-part series on the state of venture investment to Black-founded startups in 2022. Driving these reports are data from Crunchbase’s Diversity Spotlight feature, which helps indicate diversity in startups’ and investment firms’ leadership teams. Part One introduced the funding landscape for Black-founded startups in 2022, and Part Two checked out the largest rounds raised by Black-founded startups. — Special Projects Editor Christine Kilpatrick

Dr. Iman Abuzeid and Rome Portlock are part of a rare club.

The pair founded Incredible Health, a career marketplace that connects nurses with medical organizations to combat an ongoing massive worker shortage in health care. The company raised $80 million in 2022, making it one of the 52 Black-founded health care companies to receive funding that year (according to Crunchbase data). 

Between 2016 and 2022, Black-founded companies made up around 1.7% of all venture-backed deals in the health care space, Crunchbase data shows. In 2022, as health care startups overall raised more than $555 billion, Black-founded startups saw only 1.3% of that money.

“You can acknowledge that the bias exists because the data proves it, but you actually have to compartmentalize it mentally and not dwell on it,” said Abuzeid. “It doesn’t actually help you as an individual CEO.”

It’s a tough reality to ignore when Black people have historically been abused by the health care system, leading to poor health outcomes. The infant mortality rate for Black babies born to rich families is 22% higher than that of white babies born to poor families. Clinical trials meant to test the safety and efficacy of drugs and vaccines overrepresent white people — one study found that in 10 years of cancer drug clinical trials, only 3.1% of participants were Black.

You may wonder why founder diversity in health care is important when vaccines and drugs work inside the body.

“If, every time someone got into a particular car and they were fine, and then a Black person drove that car and had a 1 in 4 chance of crashing every single time, would you be comfortable with people driving that car at all?” said Jumpstart Nova partner Kathryne Cooper, who focuses on Black-founded health care companies. “If it’s not safe for one group, it’s not actually safe for any of us.”

Filling the gaps in health care equity

Most Americans are really unsatisfied with the health care system, which is littered with friction points that range from inconvenient to medically dangerous.

For example, Incredible Health, a 6-year-old startup, is focusing on a problem that has long plagued the health care industry: low nursing staffing rates. Lack of adequate staffing makes it harder for all patients to find timely care. A shortage of staff also means health professionals spend less time with each patient. 

But it’s a problem most salient in medical deserts — large swathes of the U.S. where there aren’t enough hospitals, doctors and mental health professionals to take care of the population. It can often lead to medical neglect, especially for chronic issues — Black patients with diabetes, for example, are three times more likely to lose their limbs than others, despite it being one of the most preventable surgeries. 

According to Crunchbase data, 21% of the 28 largest funding rounds to Black-founded companies in 2022 went toward health care companies fixing small gaps in the health care system. Somatus, which provides holistic care for patients dealing with kidney disease, raised $325 million in Series E funding last year. Eleanor Health, a mental health startup aimed at substance abuse patients, raised $50 million in Series C funding.

Incredible Health’s 2022 Series B raise was one of the largest in the health care staffing space that year. But it also came with a strategy: Abuzeid targeted technology-focused venture firms in the Bay Area with a history of funding underrepresented founders. 

“Frankly, it means that they don’t just talk the talk, they actually walk the walk,” Abuzeid said. “They’ve already proven that there isn’t some weird bias going on, and I don’t have to deal with that aspect at all.”

Closing the gap in health care funding

When funding flooded into the health care space in 2020 in a pandemic-induced frenzy, Black-founded startups saw less than 2% of it, Crunchbase data shows.

According to a report from digital health-focused investment firm Rock Health, 41% of Black health care startup founders said they bootstrapped their company, while less than 25% of white and Asian founders said the same.

Inequity is often baked into the fundraising process — founders with connections in the venture world are more likely to get their foot in the door. Many venture firms look at past fundraising rounds to help determine whether or not they should invest, and some minority founders aren’t always able to scrape together a sizable friends and family round to launch their business. 

But some firms like Jumpstart Nova, an offshoot of Nashville, Tennessee-based Jumpstart Health Investors that is specifically dedicated to funding Black-founded health care companies, are rethinking the process. The fund details what kinds of startups it invests in, and all founders have to fill out the same form before being considered for an investment. 

“Black founders are chronically underfunded and health care is no exception,” Cooper said. “Health care affects all Americans. And if a certain group is going to be cut out from this funding, I don’t think that’s representative of all health care opportunities.”

Illustration: Dom Guzman

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Esusu, a fintech startup that helps renters build credit with on-time payment reporting, was rejected 326 times by investors prior to its 2022 funding that valued the company at a billion dollars. 

Investors who passed over the company did not believe in “this idea of investing in low- to medium-income households and helping them get quality financial access to products,” said Wemimo Abbey, Esusu’s co-founder and co-CEO. 

That all changed in early 2022, when Esusu raised a $130 million Series B funding led by the SoftBank Vision Fund — just six months after announcing its Series A in 2021. 

Abbey, who grew up in the slums of Nigeria and came to the U.S. as a student, had direct experience of the impact of not having a credit history. He was not able to get a loan from a bank, so borrowed from a predatory lender. 

Around 47 million American households — representing more than 100 million people, or roughly a third of the country’s population — rent their homes. But those rental histories don’t help to build credit, said Abbey. Esusu works with property owners to help renters build their credit scores with on-time payment reporting. The company has 3.5 million rental units on its platform, and grew 300% over the past year. Esusu also provides rental assistance with 0% fees in order to support renters and avoid evictions. 

“As a society we’re not solving homelessness backwards, and the landlord also doesn’t have to evict people,” said Abbey. 

Esusu was one of three Black-founded U.S. startups that joined The Crunchbase Unicorn Board in 2022. At the top of the list was new health care unicorn Virginia-based Somatus, which raised $325 million in a round that valued the company at $2.5 billion. Somatus provides kidney care and prevention through a network of health care providers. 

Another Black-founded health care startup in recruiting, San-Francisco-based Incredible Health, raised $80 million last year, valuing the company at $1.7 billion. 

These three companies joined a 2022 cohort of 170 new U.S. unicorn companies, based on an analysis of Crunchbase data.

In the U.S., 13 current unicorn companies have a Black or African-American founder, out of 714 unicorn companies. This amounts to just 1.8% of U.S. unicorn companies. 

And in total, Black-founded startups in the U.S. raised about $2.3 billion in 2022, representing 1.1% of U.S. venture funding that year, per a recent Crunchbase News report. That’s more than a 50% drop in VC funding from 2021, while the broader U.S. funding market was down 37% over the same time period. 

Leading sectors

Behind these stark statistics are companies building key services for consumers and businesses. Leading sectors for funding in 2022 to Black-founded companies included financial services, health care, consumer goods and professional services, based on an analysis of Crunchbase data. 

San Francisco and Nigeria-based fintech unicorn Flutterwave, a cross-border payments platform that connects 34 countries in Africa to the broader payment ecosystem, was first valued as a unicorn in 2021. It went on to raise a $250 million Series D funding in early 2022 led by Eduardo Saverin’s B Capital Group that valued the company at $3 billion, making it the third most highly valued company with a Black founder alongside Calendly. 

Other Black-founded fintech and SaaS service companies that raised VC funding in 2022 include:

• San Francisco-based career service company Career Karma raised a Series B of $40 million led by Top Tier Capital Partners. 
• Atlanta workspace logistic fulfillment for e-commerce providers Saltbox raised a $35 million Series B led by Cox Enterprises and Pendulum Holdings. 
• An HR management platform for small businesses, Los Angeles-based Bambee, raised a $30 million Series C from QED Investors.
• San Francisco-based Wonderschool, a service to assist the setup of preschools, raised a $25 million Series B led by Goldman Sachs.
• Oakland-based Promise, a payment processor for utilities and government agencies, announced a Series B of $25 million led by The General Partnership. 

With the slower funding environment, companies tightened their belts in the latter half of 2022 to preserve cash. Only one of the companies listed here raised funding in the second half of the year. And there’s no sign of how long the U.S. venture market will have to wait to see the first Black-founded unicorn in 2023.  

Methodology

Funding amounts and counts for the most recent year were collected through Feb. 21, 2022.

The data contained in this report comes directly from Crunchbase, and is based on reported data provided by our Diversity Spotlight partners, venture partners, our community network and news sources. The data in this report is focused on the U.S. market for underrepresented minorities, namely Black-/African-American-founded companies.

Crunchbase’s dataset is constantly expanding, but there are gaps. A company may not have founders listed, or the Diversity Spotlight data may not be updated on its Crunchbase profile. We do believe we are missing companies, especially at the early stages of funding.

If you notice missing data please reach out to spotlight@crunchbase.com or verify with your company email to update your company’s Diversity Spotlight tags directly onsite.

Crunchbase, like all databases of private-market transactions, has a documented pattern of reporting delays. The data for 2022 will increase over time relative to previous years. As data is added to Crunchbase over time, some of the numbers in this report may shift.

Illustration: Dom Guzman

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After receiving a record $5.1 billion in venture capital during the height of the market in 2021, Black-founded startups based in the U.S. saw that number more than halved as VCs pulled back significantly last year.

While venture funding in the U.S. overall dropped nearly a third in 2022 — from about $337 billion to roughly $214 billion — Black-founded startups were hit disproportionately by the decline, Crunchbase data shows. Such startups saw their share of the market drop from 1.5% in 2021 to only 1.1% last year.

In general, Black-founded startups in the U.S. have struggled to gain anything above 1.1% of the venture market in the U.S. for the last several years.

“It’s like they say, when the U.S. economy has a cold, the Black community has pneumonia,” said Paul Judge, managing partner and co-founder of Atlanta-based Panoramic Ventures, which invests in emerging markets and diverse founders. “So the numbers are not surprising.”

Deals fall

Deal count numbers do not paint a better picture for Black founders. Those numbers dropped from a high of 419 deals announced in 2021 to only 260 last year — a 38% decline. The 2022 number even represents a fall from the 403 deals announced in 2020.

Venture funding also continued to get worse as the year progressed for Black founders, until a slight pickup in the last quarter. 

While almost $1.3 billion went to Black founders in the first quarter of last year, that number fell to $184 million in the third — the lowest total since Q3 2020.

The fourth quarter saw a slight comeback, hitting $274 million.

Seen it before

The numbers are disappointing, but not shocking to those in the venture industry.

“I would say it’s not a surprise,” said Nicole DeTommaso, a senior associate at Harlem Capital, an early-stage venture firm focused on investing in minority and woman founders. “Generally what happens is diverse founders are hit the most in a downturn.”

DeTommaso said there often is a “subconscious bias” during a drop in the market, where investors seek what they know and what is familiar to them — which often is not minority founders.

Along with that, it is clear this is no longer 2020, when firms and corporations — caught up in the Black Lives Matter movement in the aftermath of George Floyd’s killing — created funds and other pots of monies specifically to go to Black and other minority founders.

“It’s very clear that was top of mind at one point and not anymore,” DeTommaso said. “That was expected. That’s the human condition — you get excited and it’s top of mind. Then it goes away.”

Judge, a serial entrepreneur who has been in the tech industry for more than two decades, agrees that many have not kept their promise of funding minority-founded startups. He takes a critical view of the numbers and even the “improvement” some saw last year.

“We are so far off,” said Judge, who also is co-founder and partner at incubation center TechSquare Labs. “We are talking about (being off) by a magnitude of more than 10x. It’s like the decimal point is in the wrong place when you look at the money that goes to Black founders.”

With the Black U.S. population estimated to be about 13%, Judge questions why only 1.1% of venture dollars goes to such founders. 

He also agrees that the current downturn has made it easier for VCs to turn to their old ways of conducting business — the warm intros and closed networks that often leave Black founders out in the cold.

Investors are not doing their jobs by not opening up their sourcing, said Judge, adding that numbers show investing in a diverse set of founders creates the best returns.

“In investing you find alpha in places where other people aren’t looking,” he said. “I’m not talking about social impact, I’m talking about delivering the best returns.”

Judge, who remembers fundraising for his first company more than a decade ago, said it may be somewhat easier for Black founders to get a meeting with a VC, but it is still just as hard to finish the deal.

“It’s still difficult,” he said. “Getting in the meeting room and getting to the wire are two different things. That’s a long process and there are a lot of moments where bias can show up.”

With the numbers where they are, it’s fair to wonder if the venture world has improved for Black founders.

“I think we’ve made progress,” DeTommaso said. “I think the VC and investor base, including LPs, needs diversity.

“Things have gotten better, but they are not where they need to be,” she continued. “But it’s a slow process.”

One that seems to even stall at times.

Methodology

Funding amounts and counts for the most recent year were collected through Feb 21, 2022.

The data contained in this report comes directly from Crunchbase, and is based on reported data provided by our Diversity Spotlight partners, venture partners, our community network and news sources. The data in this report is focused on the U.S. market for underrepresented minorities, namely Black/African American-founded companies.

Crunchbase’s dataset is constantly expanding, but there are gaps. A company may not have founders listed, or the Diversity Spotlight data may not be updated on its Crunchbase profile. We do believe we are missing companies, especially at the early stages of funding.

If you notice missing data please reach out to spotlight@crunchbase.com or verify with your company email to update your company’s Diversity Spotlight tags directly onsite.

Crunchbase, like all databases of private-market transactions, has a documented pattern of reporting delays. The data for 2022 will increase over time relative to previous years. As data is added to Crunchbase over time, some of the numbers in this report may shift.

Crunchbase’s Senior Data Editor Gené Teare contributed to this report. 

Illustration: Dom Guzman

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“We’re going to invest in an underlooked asset class that is overperforming.”

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Let’s just have that sink in for a minute. It’s not about gender, it’s about being a capital-focused operation, comprised of investors wanting returns. Nothing more, nothing less.

While the 2019 stories of Glossier and Rent The Runway and The RealReal were all important amplifiers of the prowess and strength of female founders, underneath it all stands another perspective: diversity-focused funds weren’t innately impact-focused funds.

And as the year comes to a close, Crunchbase data shows what ‘overperforming’ really means: 2019 has been a historic year for female-founded unicorns, which were born at an unprecedented pace.

For context, in 2018 there were 15 unicorns born with at least one female founder. This year, there were 21 startups founded or co-founded by a female that became unicorns. The chart below shows how many companies with at least one female founder passed the $1 billion in valuation mark each year, starting in 2005.

The Companies

When we talked to beauty company Glossier founder Emily Weiss, she said, “Beauty wasn’t a category that many [venture] firms were interested in exploring.” She added “then 2018 came, and it was a record year for venture funding in the beauty industry.”

She bet that 2019 might break the record again, and was proven right in a few ways as companies in beauty and commerce also landed billion dollar valuations (think FabFitFun and The RealReal).

Beyond beauty and commerce, female founded and co-founded unicorns born this year include Hims, Airwallex, ezCater (which we covered previously), and Scale.

While it’s easy to be distracted by skyrocketing valuations, it’s worth noting that these companies are not immune from weaknesses and mistakes.

For example, 2019 unicorn Away was co-founded by Jen Rubio and Steph Korey, and recently was exposed for abusive management styles and working conditions from The Verge. Korey has since resigned, and former Lululemon COO and CFO Stuart Haselden took over as a chief executive alongside Rubio.

But let’s circle back to the broader issue at hand. Before these companies had to convince investors they had a $1 billion dollar idea, they had to convince the same cohort to cut a check in the first place. And that brings me to the story of Shani Dowell.

A Historic Fundraise In Tennessee

Shani Dowell just raised $1 million in funding for her Tennessee-based edtech platform, Possip. We typically wouldn’t cover a funding round so small, except hers is historical: the company claims that Dowell is the first black woman in Tennessee to raise more than $1 million in venture funding.

Nationally, less than 2 percent of all venture funding goes to companies led by women, and .006 percent to companies led by black women, according to the company.

Dowell’s fundraise is both a sign of progress and lack thereof, which is similar to the greater data pulls we get when we unpack diversity. For example, while female-founded unicorns are being born at an unprecedented pace, they only make up 4 percent of startups that reached a valuation of $1 billion or more in 2019.

Adding onto that, female-only founded teams are only raising $3 dollars for every $100 spent, according to Crunchbase data.

But Dowell’s story provides a glimmer of hope. She got her start through the Nashville Entrepreneur Center. This fact may support the idea that emerging programs and institutions are working, albeit slow. And the data around female-founded unicorns shows us that these companies, from an investor side, are far from a charity case, they’re vehicles for returns.

Illustration: Dom Guzman

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The New York-based fund, which mainly invests checks between $250,000 and $1 million, was founded by  Henri Pierre-Jacques and Jarrid Tingle in 2015, but launched officially in June 2018.

To date, Harlem Capital has invested in eight companies through Fund I, from Aunt Flow, a Columbus, Ohio-based company that produces organic cotton menstrual products, to Wagmo, a dog wellness plan upstart. It plans to make 30 investments out of this vehicle, and span the country while doing so (current portfolio companies are all over, in Boston, Salt Lake City, Atlanta, Chicago, Columbus, Baltimore, and San Diego).

Harlem Capital plays around in the seed and early stage space, and considers itself “industry agnostic.” However, per its website, the firm says it doesn’t generally invest in cannabis, biotech, hardware, or crypto. In other words, “capital intensive businesses.”

Now let’s go back to its broad mission statement: 1,000 diverse founders over the next 20 years. I chatted with the partners over at Harlem to learn more about what this means, and how they’re going to do it.

A Defined Network

Jarrid Tingle, a managing partner and co-founder of Harlem Capital, said the firm defines diversity “as women of any race and people of color, so think Black, Latinx, Native American, any people who have been limited.”

He continued that Harlem Capital fields about 50 percent of its deals through direct emails. A quick look at the firm’s website explains why: the “Investment Criteria” tab outline the seven key things a company needs to get a check, from a base revenue of $100,000 to at least one full time founder. Explicitness, when sourcing underrepresented founders, is key to another diversity-focused fund: Charles Hudson’s Precursor Ventures. When I chatted with Hudson for a previous story on the slow progress of VC dollars to minorities, he said that Precursor had a simple approach to deal flow.

“This might sound weird, but I don’t think we do anything in particular to attract female founders. We are a team of 3, two of the people on our team are black females and I think that does help some,” Hudson wrote in an e-mail. “I think most of what we try to do is to signal to the market that we are interested in building a diverse portfolio; that’s why we put the faces of the founders we backed front and center on our website.”

It’s worth noting that while Harlem Capital is investing in diverse founders as a focus, its investment criteria is clearly fiscally-focused (both co-founders hailed from private equity). In other words, this is not an impact fund. For example, the ideal founder would ideally have had some momentum or help before Harlem Capital steps in, as the firm looks for revenue, an attractive valuation, and an investment realization of four to seven years, per its website.

“Because we want folks that are underrepresented, we cast a net as wide as possible and are easy to find,” Tingle said. That includes adding his personal e-mail, along with his co-founder’s, on the website. The other 50 percent of deal flow comes from more traditional methods, like personal networks and other firms.

One unique way that Harlem Capital is finding diverse founders who may not have easy access to capital is by partnering up with Techstars. Henri Pierre-Jacques, co-founder of Harlem Capital and a managing partner, said that “Techstars is the most diverse top tier accelerator.

“Fifty percent of the classes [at Techstars] are minorities, and we really felt like that is the kind of accelerator we want to partner with.” He said that the accelerator will send 500 deals over the next five years to Harlem Capital.

A Look Ahead

As for what’s ahead, the team plans to invest in 30 startups with this new fund. The co-founders view other diversity-focused funds as friends, not competition. Pierre-Jacques explained that “people think you can’t have two to three diversity funds,” but the same wouldn’t go for “software-focused funds.”

“The reality is, there are only 10 to 15 funds over $10 million focused on diversity,” he said.

So for now, according to Pierre-Jacques, an $11 million Series A funding round could not just be from funds focused on diversity. But, he said, over time that could shift.

And sure enough a few weeks ago, Harlem Capital tweeted out a congratulations to another firm in the space: one that had raised its eighth fund to focus on African American, Latino, and LGBTQ markets and entrepreneurs.

Illustration: Dom Guzman

But instead of leading her pitch to limited partners (LPs) with a reference to gender, she phrases the investment thesis as follows: “We’re going to invest in an underlooked asset class that is overperforming.” 

“If it’s just about [investing] in more female founders, everyone has a different motivation,” Neundorfer said. “We don’t want this to be seen as a nonprofit charity; that’s not what it is.” 

As Neundorfer works to raise $20 million for her next fund, there’s a greater trend in her favor: according to Crunchbase data, over $20 billion has been invested in female-founded and co-founded startups so far in 2019. 

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Of that $20 billion, approximately $5 billion has been invested in female-only founded startups. The remaining $15 billion, according to Crunchbase data, went to startups with female and male co-founders.

The year-to-date numbers put 2019 on track to be the second-best year for dollars invested into startups with a female founder and co-founder, excluding the $14 billion outsized round in 2018 into female-founded Ant Financial.

Neundorfer, like many partners of micro-firms investing in smart women founders, is looking to bet on the next Away, Glossier, or Rent The Runway. That in mind, let’s start with the billion-dollar ideas that happened to be led by female founders this past quarter.

Supergiant Rounds

So far this year 44 supergiant rounds (those of $100 million or more) have gone to female-founded and co-founded companies. That adds up to 11 percent of dollars invested in rounds over $100 million in the quarter. 

Here’s a look at some of the companies that made up those millions:

• Shivani Siroya started Tala in Kenya as a financial services startup to help individuals who are underbanked safely save, borrow, and grow money. The company raised a $110 million Series D round in August, as reported by Crunchbase News.  

• Cindy Mi and Jessie Chen helped start VIPKID, which connects students around the world to teachers in North America for English lessons. It raised $150 million in a Series D in September, bringing its total known funding to $975 million. 
• Kelly Tiller started Genera Energy in Vonore, Tennessee to make biomass supply solutions for bio-based products. Tiller raised $118 million for her compostable products made from agricultural materials in July. (The company has raised $127 million to date.)

Tala was started in 2013; VIPKID began in 2013, and Tiller kicked off Green Energy in 2008. It’s a reminder that not everyone is Brex, and some supergiant rounds take time to secure.

Glossier, a female-led company valued at $1.2 billion dollars, is another example of how long it takes to raise nine-figures. Founder Emily Weiss told Crunchbase News that when her company was founded five years ago, “beauty wasn’t a category that many [venture] firms were interested in exploring.” Then 2018 came, and it “was a record year for venture funding in the beauty industry.”

She added: “I imagine 2019 might break that record again. Beauty, commerce, conversation, and community are all rapidly moving online, and it’s clear that investors are waking up to the opportunity this creates for a digital-first and customer-centric company like Glossier.” 

But before Glossier became a unicorn, valued at over $1 billion dollars, it had to convince investors it was a valuable bet. To do so, it had to raise smaller rounds when it wasn’t a household (or dorm room) name. So let’s unpack the trends around Series A rounds, or the first institutional round of funding a startup can raise.  

Notable Series A Rounds

Female founded and co-founded companies took home 16 percent of Series A dollars invested in 2019. 

One Series A round that stood out in Q3 2019 was Incredible Health, a marketplace for hospitals to hire qualified nurses with a more efficient matching process. CEO and Co-founder Dr. Iman Abuzeid raised a $15 million Series A round led by Andreessen Horowitz. Another was Honeycomb, which helps engineers debug their code. It raised an $11.4 million Series A funding round led by Scale Venture Partners in September. The company is co-founded by CEO Christine Yen and CTO Charity Majors. 

Large Series B Rounds

Looking one step further on the venture maturity chart, female-founded and co-founded companies took home 16 percent of Series B dollars invested in 2019. 

A Series B company to watch is Glycomine, a biotech startup that develops therapeutics for diseases with no current treatment options. CEO and founder Agnes Rafalko raised a $33 million Series B in August. Another was Vymo, a personal assistant app that helps sales teams. It was co-founded by its CEO, Yhamini Bhat. Vymo’s origins are in India, but it is now setting up offices in New York as well. The company raised an $18 million dollar Series B led by Emergence Capital in July. According to the company, it has 100,000 salespeople at over 50 global enterprises and counting using their mobile app. 

For Amy Banse, Managing Director and Head of Funds at Comcast Ventures speaking at the TechCrunch Disrupt Women’s Breakfast, more women in venture would create a domino effect. Currently, around 11 percent of VCs with check-writing ability are women, up from nine percent a couple of years back. Of the 130 active companies in Comcast’s portfolio, 26 percent have a female co-founder. 

Overall 13 percent Of Invested Dollars Go To Female-founded And Co-Founded Companies

In 2019 through Q3, 13 percent of invested venture capital dollars went to female co-founded startups, up from 10 percent in 2014. The figure, however, is below 2018’s 17 percent.

In 2019 to date, $87 dollars go to male-only founded teams for every $100 invested by VCs. Female-only founded teams are therefore only raising $3 dollars for every hundred dollars spent. Male and female co-founded companies raised $10 dollars for every hundred dollars spent. 

While there are more female-founded and co-founded unicorns than ever before, and therefore proof that there’s a business in investing in diverse founders, global data doesn’t yet live up to this trend. 

So far, 2019’s global deal volume for female-founded and co-founded teams is stable at 19 percent, staying within a 2 percent range from 17 to 19 percent over the last few years.

To Close

So let’s dial back to where we began: a micro-fund that wants to invest in female founders working on ideas with the potential for impressive returns. 

While the data doesn’t quite reflect the sort of proportional change we expect — yet — seeds are being planted in a time where we see billion-dollar companies led by women founders. Perhaps in time, the market will catch up to the data that proves it’s worth investing in “an underlooked asset class that is overperforming.”

Methodology: Notes On The Data

The charts and information in this report are based on reported data in Crunchbase. In other words, it’s based on publicly disclosed rounds included in Crunchbase dataset.

For this quarterly report, our analysis is based on announced funding to companies with founders associated. This is in contrast to our overall venture capital report where we use projected data in order to correct for data lags for the most recent quarter. Over time we fully expect more founders to be added to Crunchbase, as well as a reporting lag on funding which will be greater for the most recent quarter. For this report we include private company fundings from seed through to late stage venture. We exclude private equity rounds. 

Crunchbase’s dataset is constantly expanding, but there are gaps. A company may not have founders listed on its Crunchbase profile. Or Crunchbase might not have a gender listed for founders that are attached to the person’s Crunchbase profile. (Note: In addition to “male” and “female,” Crunchbase has over two dozen other gender tags.) Based on an analysis of current data for this report, more than 80 percent of dollars raised in the last five years are associated with companies that have founders.

Crunchbase, like all databases of private-market transactions, has a documented pattern of reporting delays. It can sometimes take between weeks to months for some rounds to be announced publicly and subsequently get added to Crunchbase. This is especially the case for seed and early-stage deals, which are often raised by companies before the company launches a product, or otherwise gets much outside media coverage which surfaces information about the company’s funding history. As data is added to Crunchbase over time, some of the numbers in this report may shift slightly.

Seed includes angel, pre-seed, seed, equity crowdfunding, and venture series unknown below $1 million. Venture rounds includes early and late stage venture, and corporate venture. We exclude private equity rounds from this report.  

Illustration: Dom Guzman