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Double set of locks blocking minority founders

Data: Crunchbase; Note: Includes seed, venture, corporate venture, and private equity to venture-backed companies; Table: Axios Visuals

We've seen the data: VCs invest in minority-owned businesses at a dismal rate. But the data is noisier than it seems.

Why it matters: Minority founders face an even steeper climb to raise money than it may appear.

The intrigue: White men overwhelmingly occupy the top ranks of venture capital and private equity.

  • They tend to invest in companies led by people who look like themselves.
  • That means companies with Black, Latino, Indigenous or Asian founders — not to mention women — often find themselves locked out of fundraising.

Meanwhile: On the rare occasions a minority founder does win over investors, they — like many founders — often end up forking over a majority of their equity while fundraising.

The bottom line: For minority founders, it's not just about undercapitalization, Ron DeLyons, of Synton Capital Partners, tells Axios.

  • A "lack of access to non-equity-based capital" engenders a "lack of opportunity to compete."
  • It prevents companies that were once minority-owned from winning the minority business enterprise contracts specifically established to help close the wealth gap.
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