Report Explores The State Of Blacks In Venture Capital

Black VC

There’s a widely publicized dearth of venture capital invested in Black-owned companies in the U.S. But Blacks also comprise a tiny portion of investors at VC firms—4% of the total number of VCs, according to the most recent edition of the VC Human Capital Survey from the National Venture Capital Association, Venture Forward and Deloitte & Touche LLP. Plus, 3% of Black investors hold key decision-making roles.

With that in mind, BlCK VC, an organization of Black investors in the U.S., just released the latest State of Black Venture Report. Sponsored by Amazon Web Services (AWS) and SVB, the survey looked at 225 Black investors at various stages in their careers, also drawing on other research. (A 2022 survey looked at partner-level investors). In addition, researchers explored the role of Black women in the industry.

The clear message: “It’s still a difficult experience to progress in your career as a Black investor,” says Sydney Sykes, BlCK VC cofounder and board chair.

Positive Results

First, the positive findings: The number of first-time Black fund managers is growing. Some 28.6% of Black fund managers launched their first fund in the last year. That’s consistent with 2022 findings that the number of first-time Black fund managers is increasing.

Also, 29.9% of Black investors are at funds with assets under management (AUM) greater than $1 billion. That suggests a growing number of Black investors are becoming involved in larger funds.

Then there’s the role of mentors. Some 72.4% of Black junior-level investors have a Black mentor in the venture industry. “There’s a community of people lifting others up as they climb,” says Sykes.

Less-Positive Results

But the survey also revealed there’s a long way to go:

  • Black investors at larger funds are more likely to be junior- to mid-level talent. A relatively small proportion of Black investors at such firms hold decision-making roles.
  • Black fund managers are raising funds that are 35% smaller than their target fund size. Despite a growth in the number of Black fund managers, persistent barriers impede their ability to achieve their target fund size.
  • Black women face an especially hard time. Black women investors are disproportionately represented in non-partner level roles. Only 16.7% of the Black women surveyed have such roles. Plus, Black women typically write smaller checks—a median check size of $350,000 as opposed to $625,000 for their Black male counterparts.
Black business man

Ultimately, the report finds that, for Black investors to make a significant impact in the venture industry, more Black decision-makers need to hold leadership roles at large funds.

In addition, creating real change, according to Sykes, requires grabbing the attention of LPs, as they decide where to invest, while also providing entrepreneurs with options, so they can take into consideration whether a firm has backed entrepreneurs of color in the past.

Furthermore, while it’s critical that decision-makers have the necessary data, they also need to understand how much their firm’s success depends on taking steps to change. That means, “Getting decision makers the information they need to make an informed decision and also to feel the pressure to make decisions that benefit the whole population,” says Sykes.

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