Venture funding to Black-founded US startups in 2023 totaled $705M across 191 deals, or less than 0.5% of all venture funding, down from $2.4B in 2022
Context & Ripple Effects
The 2023 total follows an already diminished 2022, when Black U.S. founders received about 1% of U.S. venture funding in the prior year's funding tally. The trajectory worsened during 2023: third-quarter funding fell to $39.7 million, or 0.13% of capital allocated to startups, in Crunchbase's Q3 analysis.
The new annual figure indicates that the pullback was not confined to a single quarter. It matters because the share of venture capital reaching Black-founded companies has moved from persistently low to below half a percent amid the broader funding reset.
First-order effects
- Black-founded U.S. startups collectively had far less venture capital available in 2023 than in 2022, limiting the financing base across 191 reported deals.
- Investors and founders seeking follow-on rounds face a materially tighter capital environment, particularly after the weak third-quarter allocation reported earlier in 2023.
Second-order effects
- Funds, accelerators and limited partners that track founder access will face stronger pressure to show whether their sourcing and follow-on processes are preserving access during a downturn, rather than only during expansive funding cycles.
- With fewer dollars reaching this founder group, companies raising later rounds may compete more intensely for a smaller set of investors, potentially affecting their ability to sustain hiring and product development plans.
Third-order effects
- If the pattern persists, venture downturns may deepen capital concentration by making access to established investor networks more consequential for which startups survive to later stages.
- The data will make it easier to distinguish broad venture-market retrenchment from disparities in capital allocation, increasing scrutiny of how investors measure and maintain founder access across cycles.
The trend: This is a data point in the trend of venture-market contractions amplifying the concentration of capital among founders and companies with the strongest access to financing networks.