As Black Investment Firms Gain Ground, Gender And Geographic Concentration Still A Problem

Black Investment Firms
As Black investment firms gain ground, it still pays to be in Silicon Valley: 75 percent of U.S. VC distribution is in three markets: California, New York, and the Massachusetts-D.C. region. Photo by Bruce Mars on Unsplash

The venture capital and private equity industries are still wrought with the underrepresentation of women and minority investors in decision-making roles. Just 2 percent of investment professionals are Black. 

In 2017, we began documenting the rise of Black-owned firms in our story, Breaking the Mold? Black-Owned Venture Capital Firms Mirror Traditional, better understand how these firms were stacking up against their counterparts. 

Two years later, we’ve added a total of nine new investment firms established by single Black founders or a Black co-founder between 2018 and 2019, taking our scope of evaluated firms from 33 to 46. 

To evaluate these firms, we cross-referenced data via Crunchbase, LinkedIn, email correspondence, and news reports to understand how these firms are performing and operating. 

What we found is that Black-owned venture capital and private equity firms continue to make strides, accounting for over 900 investment deals and 144 exits, and managing anywhere from $5 million to $3 billion in capital. 

But a few challenges still remain. 

It still pays to be in Silicon Valley or Silicon Alley

Three-quarters of America’s venture capital distribution is concentrated in three markets: California, New York, and the Massachusetts/D.C. region. Primary offices are also located in these popular regions. 

Of the 46 investment firms in our analysis, nearly 48 percent are located in California. And 28 percent of firms are located in New York. Georgia stands as an outlier with just three known firms represented. While a few have invested in companies outside of these markets, the majority place their bets closer to home. 

It’s still a boys’ club

Across the industry, women make up just over 9.5 percent of senior investment leadership roles at top venture capital firms, a number that has risen last year from 8.9 percent. 

Black-owned firms haven’t appeared to cross the chasm of gender diversity in decision-making roles at their firms either. 

Several firms still have small teams of just one or two investors, but for firms beyond that scale, the investment teams skew majority male. Just 26 women hold an investment role across the 46 firms represented. Black-owned firms with high numbers of women represented on the team were firms founded by women like Reach Capital by Shauntel Garvey, Impact America Fund by Kesha Cash, and Backstage Capital by Arlan Hamilton. 

Major growth in Black investment firms

A few standout firms made big bets. For instance, Backstage Capital went from a reported 5 investments in 2017 to over 50 investments roughly two years later. 645 Ventures, by Nnamdi Okike and Aaron Holiday, went from an account of just 27 deals in 2017 to a reported 40 deals by 2019. 

Gone so soon

We also lost a few promising ventures that received a bit of press but very little was reported about their activities. For instance, Huddle Ventures, an initiative created by former NFL player Derrick Morgan and investor Rodney Sampson in 2017 appears to have dissolved sometime last year. Sampson says that during its brief history, Huddle Ventures invested $1 million dollars in Cross Culture Ventures, TechSquare Labs and a private venture. Morgan is now launching a $200 million Opportunity Zone Fund following his retirement from the Tennessee Titans. 

The Harriett Fund was developed in 2017 partnership with Digital Undivided’s BIG Accelerator initiative out of Atlanta, Georgia, and investor Gayle Jennings O’Byrne. The goal was to invest in Black and Latinx women building tech startups. The program continues, but we were unable to confirm any investments from this fund.

Other firms that have little reported activity after 2017 include Caerus Ventures, Black Angel Tech Fund, Wolverine Angels, Autochrome Ventures, and Lingo Ventures. 

Have any tips or insights to share to add to this story? Reach our team at hello@theplugdaily.com.

This article was originally published on The Plug. It is reposted here with permission. Read the original.