Double set of locks blocking minority founders
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.
- 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.