Fortune reports that in 2018, only 34 Black female founders had ever raised $1 million in venture capital for their company — today that number has tripled.
According to Project Diane, in this year alone 93 Black women have reported their ability to secure $1 million in investor backing for their businesses. This biennial report on the state of Black and Latinx women founders was created by digitalundivided and reports that 90 Latinx women have been able to raise the same amount.
“These stats are the ones that are going to spark conversations and lead to real, true systemic change,” share digitalundivided CEO Lauren Maillian.
This information comes from a database of about 650 Black and Latinx female founders. It finds both groups of women combined received only 0.64 percent of total venture capital investment between 2018 and 2019, for a total of $3.1 billion.
About 0.27 percent went to Black women and 0.37 percent went to Latinx women.
A continued lack of access to institutional venture capital is the drive behind how Black and Latinx women operate their businesses. Only 57 percent of the companies included in the ProjectDiane database raised capital while many businesses owned by Black women did not take on venture funding at all.
Black women’s approach to running a startup with this measure rather than the high growth, VC-backed model is what may have helped a bulk of the companies led by women of color to avoid the same snares that have plagued their peers.
When it comes to the success of the business, reports indicate that of the 334 startups in digitalundivided’s database in 2018, 73 percent are still in business. This means there is a two-year fail rate of 27 percent for those startups — a number far lower than the fail rate of 40 percent for all startups, according to digitalundivided.
“Black women look at their businesses as a source of wealth creation, not just a job,” Maillian said. “Other founders look at building and failing and building and failing as a job. As women of color, we don’t get that privilege. We look at having the title of founder and CEO as a ticket to wealth creation.”
Companies led by women of color have also avoided the leadership and cultural problems that have troubled others in recent years.
“To make something out of nothing is something women of color know how to do,” said Maillian. “We’re scrappy. We treat money we do receive, whether revenue or investment, by making every dollar stretch.”
The report also reveals historically Black school, Howard University — located in Washington, D.C. — produces more Black women startup founders than other undergraduate institutions.