Minority Start-up Founders Research
To have a list of credible and reliable research, articles and/or studies on the under-representation of minority startup founders. An ideal response would statistics surrounding people of color, latinx, women, disabled people, and other similar minority start up founders, that detail how they receive very little venture capital dollars in both the United States and globally when compared to non-minority founders.
United States Focused Research
- As revealed by a study conducted by RateMyInvestor in partnership with DiversityVC, most venture-backed startups are "still overwhelmingly white, male, Ivy League-educated and based in Silicon Valley," This study requires a download which we went ahead and did, and then placed in this Google document. If a personal download is required outside of a Google document, that can be done by providing an email address here.
- In the above referenced study some statistics include: only 9.2% of startup founders are women, over 75% of the venture- backed founders were white, and the remaining 25% was largely represented by Asian founders (17.7%). As well, just 1% of venture-backed founders were black, Latino founders made up 1.8% of those receiving funding, while Middle Easterners totaled 2.4%.
- According to the United States Securities and Exchange Commission in a 2020 report, there has been a 38% increase in the number of minority-owned businesses, but minority businesses face less access to capital. For example, new black owned businesses start with almost 3 times less in terms of overall capital [$35,205 for black businesses in comparison to $106,720 for white owned businesses].
- In 2018, minorities made up 10.7% of entrepreneurs who were looking for capital. They had an investment yield of 22% which can be compared to a baseline rate of 23.2%.
- Only 5.3% of angel investors are minorities.
- In 2018, women founded 21.6% of all startups compared to only 4% in 2001. However, a study found that men were significantly more likely to secure funding than women when pitching the same business content. Another study found that investors ask gendered questions, whereby men are asked about growth-oriented gains facilitated by capital and women are asked about non-losses.
- According to this 2020 report from Crunchbase, Black and Latinx tech startup founders have made almost no progress in securing venture capital (VC) funding over the past seven years in the United States. During that period, startups led by Black and Latinx founders received just 2.4% of VC investments; so far for 2020, that figure is slightly higher at 2.6%
- A McKinsey study found that there are lower percentages of loans approved to non-White-owned small businesses. Black-owned small businesses, in particular, struggle to get loans with only 29% being approved. That compares to 50% approvals for Latinx applicants and 60% for White applicants.
Summary Of Our Early Findings Relevant To The Goals
- In the one hour allotted for the initial research, we were able to determine that the majority of the information requested is available in the public domain. As a reminder, Wonder only uses publicly available sources. We do not have access to paid databases or paywalled reports, but we can cite them in research for reference only [in case purchase is desired]. If that is of interest, that would clearly have to be communicated to us in any reply. However, no indication of paid resources to add value to this research was seen in the discovery phase.
- We were able to provide some research for the United States that is current. These are robust data points that standalone, and also set the table for future research. We did not have time to look globally, which will be reflected in the scoping below.
- Please select one or more of the options provided in the proposed scoping section below.
Proposed next steps:
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