My interest in venture capital (VC) began long before I ever imagined building an actual venture capital fund. In college, I opened a women’s clothing store and quickly learned that having a great idea was only part of what it took to build a business. I needed capital to grow, and finding that money wasn’t easy.
That experience stayed with me. Years later, when I began looking more closely at who gets funded in America—and who doesn’t—I realized that the entrepreneurial challenges I had encountered were part of a much larger story. So I started digging into the numbers.
When I first started researching the racial disparities in venture capital, what I learned shocked me. Women of color make up nearly 20% of the U.S. population, yet our best estimates indicate that only 0.39% of venture capital funding is invested in women-of-color-owned businesses. These numbers weren’t just disappointing; they infuriated me.
And though Black women comprise approximately 7% of the U.S. population and start more companies than any other demographic, our research reveals that they obtain less than 0.35% of VC funding across all sectors. While we comprise over 50% of the U.S. population, women of all races combined obtain less than 2% of all VC funding. The rest is awarded to male founders.
The more I dug, the more infuriating the story became. I learned that the vast majority of dollars venture capitalists invest come from sources like public employees’ retirement funds—their pension funds. Public employees are very diverse.
In the federal workforce alone, 44% of workers are women; 18% are Black; 10% are Latino; 7% are Asian American; 2% are Native American; less than 2% are Alaska Natives; and Native Hawaiian and Pacific Islanders make up less than 1%. That means, in general, white men are investing the money of women and Black and brown people, yet they direct just a pittance of those funds back to Black people, brown people, or women of any race. In other words, the money flows from the pension funds of diverse people to Private Equity (PE) and VC industries comprised almost entirely of white men.
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