Back in 2023, startups led by Black founders raised less than $1 billion in venture capital, dropping to levels not seen since 2016. That’s a sharp shift from the momentum sparked after George Floyd’s murder in 2020, when firms rushed to announce new funding pledges and inclusion goals. But the follow-through? Mostly talk, little action. Even with the data clearly showing diverse teams deliver better results, the money is drying up.
DEI pushback is slowing progress
Over the past year, corporate diversity efforts have hit roadblocks. Companies like Meta, Amazon, and others have scaled back internal DEI programs. On top of that, legal attacks, like the lawsuit against Fearless Fund, which supports women of color, have put pressure on organizations that back underrepresented founders. The message being sent? Diversity work isn’t as welcome anymore. But ignoring the issue won’t solve it, it just widens the gap.
California’s SB 54 is a step in the right direction
California lawmakers are pushing back with real action. Senate Bill 54 now requires venture capital firms doing business in the state to report the race and gender of the founders they fund. It’s a transparency move meant to hold firms accountable and shine a light on who’s actually getting support. The deadline is 2026, but the shift in expectations is already here.
Why this isn’t just a moral issue
This isn’t about charity. It’s about building better companies. Studies show diverse founding teams see up to 2.5x higher cash flow per employee and are 36% more likely to beat peers in profits. Amazon’s $150 million Catalytic Capital initiative is built on that idea, betting on overlooked founders aren’t a risk, it’s a smart move.
Keep the pressure on and the doors open
We can’t afford to let this backslide continue. If funding keeps shrinking for Black and minority founders, we lose the ideas, innovation, and leadership they bring. The path forward is simple: track the numbers, keep building inclusive systems, and call out performative pledges. Change only happens if we keep pushing.
Key Takeaways
Venture capital funding for Black founders has dropped significantly, highlighting the need for continued support and accountability in diversity efforts.
- Impact – The decline in funding for Black founders undermines the progress made in promoting diversity and inclusion in the tech industry, threatening to widen the gap in opportunities and innovation.
- Action – Companies and venture capital firms must implement and enforce policies that ensure diversity and inclusion, such as transparent reporting and accountability measures.
- Empowerment – Advocates and policymakers should continue to push for legislative initiatives like California’s SB 54 to mandate transparency and hold firms accountable for their funding practices.
