One step forward and a half step back is the jagged trajectory of the proportion of venture capital funding going to female founders over time. For more female founders—particularly those of color—to get funding, venture capital funds led by women and people of color need to be better funded.
According to Q1 2022 PitchBook NVCA Venture Monitor, in the first quarter of 2022:
- Mixed-gender founding startup teams received 15.6% of venture capital dollars, down 17.1% in 2021.
- All female-founded teams received 2.0% of venture capital, down from 2.2% in 2021.
Black and Latinx female founders raise less than 1% of venture capital.
Corporates like General Mills show that becoming limited partners (LPs) in diverse-led venture capital firms isn’t just the right thing to do. It is the strategic thing to do. General Mills recently announced its venture capital arm, 301 INC, will invest $15 million in two early-stage venture capital funds, Fearless Fund and Supply Change Capital. Women lead both.
These VCs have a unique perspective on the trends in their sectors and a large pipeline of talented, diverse-founded startups that could be future acquisition targets. These venture firms address the under funding of diverse funders in tech and consumer product goods (CPG).
Women-led venture funds are twice as likely to invest in startups with one female founder and more than three times more likely to invest in a female CEO. Women-led U.S. funds outperform all-male rivals.
Large VCs with little to no diversity among their investment decision-makers have unconscious biases and lack the connections to diverse founders. A typical Silicon Valley VC expects to see investments from friends and family as a sign of confidence in founders. But, most Black and Brown founders don’t have friends and family with money to spare to…
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