Share Of Startup Funding For Black Founders Hits Multiyear Low

The share of U.S. startup funding going to companies with Black founders hit a multiyear low in 2024, even as overall funding ticked slightly higher.

Only around $730 million — or 0.4% of all funding — went to startups with a Black founder or co-founder last year, per Crunchbase data. That’s the lowest share in years, and down more than two-thirds from just three years ago.

For a sense of how the numbers have fluctuated, below we chart annual funding to Black-founded startups since 2020, along with total reported rounds.

Cleantech and health take in largest rounds

Much of the funding tally for Black-founded startups in 2024 came from a few larger rounds. Standouts include:

Twelve, a startup that transforms CO₂ into jet fuel and other useful products, picked up a $200 million Series C in September, led by Capricorn Investment Group, Pulse Fund and TPG. (The company also raised $445 million in project financing and credit, though only the Series C was included in our annual funding totals.)
Zing Health, a provider of Medicare Advantage health plans with a focus on improving health outcomes in diverse populations, raised $140 million in September from investors including Health2047 Capital Partners and First Trust Capital Partners.
Pyka, a developer of autonomous electric aircraft, raised $40 million in a February Series B led by Obvious Ventures.
Eleanor Health, a provider of outpatient addiction treatment, landed $30 million in a February Series D led by General Catalyst.
FinQuery, a provider of tools to automate accounting, budgeting and forecasting, secured $25 million in an April financing.

Black founders are underrepresented

Despite these larger fundings, however, Black founders continue to be exceptionally underrepresented relative to their numbers.

“There’s a lot of work to do on addressing biases,” said Daryn Dodson, founding partner and managing director of Illumen Capital, a venture fund investor operating on the principle that bias hinders optimal financial performance.

Per Dodson, the proportionately low funding totals demonstrate that investors appear to be passing on promising entrepreneurs due to racial bias.

Demographics support this take. Today, more than 48 million Americans self-identify as Black, per Pew Research, representing 14.4% of the U.S. population.

If funding share was in line with population, one would expect companies with a Black founder or co-founder to attract more than 14.4% of all funding (given that startups commonly have more than one founder). In reality, of course, it’s nowhere near that level.

Black Americans are also starting businesses at a steady clip. Per the U.S. Census Bureau, as of 2020, Black- or African American-owned businesses accounted for $141.1 billion in annual sales and employed 1.3 million people.

The cohort, however, does not appear to be a major recipient of the AI funding boom. None of the U.S. artificial intelligence startups that raised $100 million or more in funding last year were Black-founded companies, per Crunchbase data.

DEI efforts face political backlash but maintain some private sector support

The fall in funding share for Black founders also comes amid an increasingly hostile political climate around government and private sector efforts to promote diversity in hiring and investment decision-making.

In its initial days, the Trump administration shuttered DEI-related programs at government agencies and sought to curtail funding to entities promoting “woke” ideologies, a term interpreted as encompassing many diversity efforts.

In the private sector, meanwhile, reactions to the changed climate are mixed. Several large companies, including Meta and Target, recently announced plans to curtail or wind down DEI-related efforts. Others, including Costco and JPMorgan Chase, have said they plan to continue their commitments.

In the startup investment arena, diversity-focused venture funds did not rank among the larger small or midsized vehicles to close last year. The weak showing came amid a broader drop-off in the number of U.S. small and midsized funds closing on fresh capital.

Diversity-focused investors have faced legal challenges as well. In one high-profile case, venture capital firm Fearless Fund said last fall that it would close a grant contest for Black women business owners as part of a settlement in a lawsuit alleging discrimination.

What will 2025 have in store?

Of course, we have no idea how funding tallies will play out in the coming year. Obviously, that also doesn’t prevent us from speculating.

In the case of Black founders, it seems reasonable to expect some growth in funding share, if only because last year’s proportion was so low. Given that Black founders have a proportionately higher representation in the healthcare industry, strong funding for this sector could also help boost totals.

Methodology

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 [email protected] 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 2024 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.