Over-mentored and under-funded: Despite fighting harder, Black female founders get less funding

Most first-time founders have absolutely no idea what they’re doing. They’re furiously paddling upstream to get the help they need and in a lot of instances, they don’t know what that help even looks like. They’re just hoping to find someone who can tell them.

And the struggle is that much harder for minority female founders who have disproportionately less capital and fewer resources available to them. Black Girl Ventures (BGV) exists so Black and Brown women-identifying founders are no longer alone out there. While female minority teams gained more VC attention over the past few years, the data continues to show they’re woefully overlooked compared to their male and all-white peers.

Perception versus reality: Progress that isn’t what it seems

Black female founders are over-mentored and under-funded. According to DocSend’s research, despite averaging 57% more investor meetings than their peers, all-female teams with minorities raised less money than any other demographic in 2021—the only teams not to break the $1M mark in funding averages. Yet while investor meetings are up across the board, the proportion of meetings and money hasn’t changed for all-male teams or all-female groups with no minorities.

Comparing the ratio of meetings to funding outcomes, it’s clear to see a significant chunk of money is missing. All-female teams with minorities clocked in nearly 3x the number of meetings than other teams without 3x the funding to show for it. Numbers like this are shocking and unsurprising at the same time, leading me to believe many VCs are holding meetings both out of curiosity and as an opportunity to give their opinions when all that’s really needed is for them to write the check.

This disparity in funding is one reason why the wealth gap remains so wide and it’s why many founders with great ideas continue to fail. Either someone decides to take their idea and make it their own or we see their idea disappear from the market entirely, curbing its traction and founder morale in the process. Unfortunately, these numbers serve as a stark reminder of how far it seems like we’ve come versus how little progress the industry has actually made.

Where VCs spend the most time in all-female pitch decks

Change and accountability go hand in hand. A lot of VC firms started up over the past few years with the goal of investing in underrepresented founders, and lots of them are delivering. But there are others who’ve said they started a fund to invest in Black and Brown founders, and that’s not what you see when you look at where their money is going.

Folks in the industry need to be accountable for their words and actions. If a firm says it’s going to invest in minority and underrepresented founders, then it should do it. Because if not, we need to allocate that funding to other people who can get it done—it’s that important. The more diversity you have in any market, of any size, the better off everyone is going to be because of it.

This is also why it’s disheartening to see how much emphasis VCs place on scrutinizing all-female teams. Not only are all-female teams raising less money than their male counterparts (especially female teams with minorities), but VCs spend nearly twice as much time—85 seconds, to be exact—studying their team slides and backgrounds as they do for all-male teams.

Personally, I can’t think of many reasons why a VC would sit so long on a “team” slide other than to find reasons to say no. All-female teams get just three minutes to capture investor interest, which means VCs are spending nearly half that time on the team slide alone. What about the problem, solution, and market return opportunities these founders are solving for? VCs should be focusing more on the solutions all-female teams are bringing to the table and less on what they look like.

The tools founders need to cut through the red tape

Covid completely changed how we do business on national and international levels. It leveled the playing field, so to speak, and even when Covid is no longer a factor, the world will remain somewhat flat. Founders have to know how to do business in their immediate ecosystem and the larger ecosystem it sits inside.

One reason why the program I run at BGV works is so successful is that we help Black and Brown female founders get into the room and know exactly what to do and say once inside. We want our founders to increase their navigational prowess in the ecosystem they’re in today, as well as the broader ecosystem as a whole.

Founders who can make those plays will go further, faster, but they need to navigate a lot of red tape throughout the process. Our BGV community and development programs give women entrepreneurs the resources, tools, and know-how they need to expertly cut through the fundraising process.

• Our Change Agent Fellowship program cultivates and amplifies local Black and Brown women leaders in the community, offering a nine-month program to develop, expand, and strengthen their entrepreneurial leadership skills.
• The BGV Pitch Program flips the traditional pitch experience on its head by connecting entrepreneurs with the community via a live, high-energy crowdfunded pitch competition. Audience members vote for pitches using the Raisify platform, and the founder with the most votes at the end of the competition wins.
• Heavily invested in our communities, the BGV Connect Incubator supports our mission to accelerate 100,000 women to economic advancement via community, education, and leadership. Likewise, our BGV NextGen Program democratizes entrepreneurship for young business leaders, preparing student visionaries for a highly competitive workforce.

Programs like ours help democratize funding for Black and Brown female founders, giving them a community to connect with like-minded entrepreneurs and opportunities to close the generational wealth gap. Together, the BGV community is delivering on our mission to create a more equitable society.

You can learn more about our work by visiting the Black Girls Venture website. And read more about DocSend’s latest research, by downloading the 2022 Funding Divide.