Editor’s note: This article is the second 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 Three focuses on VC investment in Black-founded health care startups. — Special Projects Editor Christine Kilpatrick
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.
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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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