Diversity Startups Venture

Special Series: VC Dollars To Black Startup Founders Fell More Than 50% In 2022

Illustration of Black Founders looking at startup rocket

Editor’s note: This article is the first 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 Two in the series highlights the year’s biggest funding rounds to Black-founded companies, and Part Three focuses on investment in Black-founded health care startups. — Special Projects Editor Christine Kilpatrick

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.

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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.


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  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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