Aug 23, 2022 - Business

Startup tech diversity slows

Illustration of a pattern of piggy banks in various shades of pink and brown.
Illustration: Aïda Amer/Axios

Chicago's tech startup diversity outpaces the national average, but a new report says more must be done to support founders who are women, Black and/or Latino.

Why it matters: The tech community makes up 8% of Chicago's workforce and is among the city's fastest-growing sectors.

By the numbers: The report from World Business Chicago's Research Center says that from 2019 to 2021, capital raised by women, Black and Latino founders increased 159%.

  • Underrepresented founders made up 23.4% of total 2022 VC capital so far, up from 8.2% for all of 2019.
  • Since 2019, Chicago has more startups with a Black or Latino founder participating in venture capital deals (5.1%) than the national average (2.5%).

Yes, but: A lot of that money comes from two Series D funding rounds: Loadsmart raised $200 million and Kin Insurance raised $82 million. Both have Latino founders.

  • For Black founders, only seven deals closed in the first half of 2022, down from 28 total in 2021.
  • According to the report, over 20% of Black entrepreneurs report a lack of access to capital.
  • Just three Black-founded startups have landed VC deals exceeding $10 million since 2019.

What's more: There are nearly 70 Black- and Latino-founded startups here, plus over 350 founded by women.

Reality check: Women-founded startups are still raising less capital; their median VC deal in 2022 was $1.01 million, compared with $1.65 million for all companies.

Zoom out: Overall, the tech sector has raised less money in 2022 than in 2021. There has been $2.5 billion in capital raised for startups in the first half of 2022, on pace to fall way short of the overall $11.8 billion raised in 2021.

Of note: The report uses data from Pitchbook and Crunchbase, which does not give information on LGBTQ+, Asian, Native American and Middle Eastern founders.

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