Editor’s note: This article is the third in a three-part series on the state of venture investment to Black-founded startups in 2026. Driving these reports is data from Crunchbase’s Diversity Spotlight feature, which offers insight into diversity in startups’ and investment firms’ leadership teams. Part 1 explored the data on funding to Black founders, and in Part 2 we spoke with Black founders who became investors.
Crunchbase data tells us Black startup founders still receive only a tiny sliver of venture funding. What the numbers don’t tell us is why investors continue to overlook those entrepreneurs, and more importantly, how the industry can improve the odds for Black and other underrepresented business leaders.
To better understand what’s driving the persistent gap — and what it will take to close it — Crunchbase News spoke with six venture capitalists who actively back Black founders about where they believe the ecosystem continues to fall short and how it can improve outcomes.
While they offered different perspectives, several themes emerged: Venture firms need to broaden the networks they rely on to source deals, founders continue to face structural barriers long before they pitch investors, and lasting progress will require changes from both investors and entrepreneurs.
Expand beyond familiar networks
Underrepresented founders face distinct pressures as the venture industry retreats to its traditional networks, according to Seae Ventures partner Arianne Kidder, who said the pullback in funding to Black founders overlooks where investors can discover market-outperforming businesses.
“The bar for all founders has gotten higher in recent years, and I don’t necessarily think that’s a bad thing,” she said, pointing out that the surplus of capital during the previous market peak meant startups that probably should not have been funded received investment anyway.
Still, the subsequent market correction has triggered a familiar defense mechanism among institutional investors, she said. “When things get hard, it’s human nature to revert to what you know and what feels safe,” Kidder said. “Unfortunately, that means back to the same networks, and so there’s been extra pressure on underrepresented founders.”
Instead of viewing diversity through a philanthropic lens, Kidder argues that the current environment means venture investors need to look outside of their conventional circles to beat the market. “Alpha is more likely to be found outside that comfort zone in founders who bring different perspectives and solutions to the table, especially in healthcare,” she said.
To date, Boston-based Seae has backed nine Black startup founders. Kidder notes that those entrepreneurs, like with the rest of the founders in the firm’s portfolio, bring “extraordinary grit, experience and passion to building sustainable solutions for the market.”
David Hornik, partner at lobby Capital, agrees that venture firms’ existing networks tend to limit who gets funded and he argues that expanding those networks requires deliberate action. To that end, his firm several years ago launched Lobby: Elevate, an event designed to support underrepresented startup founders.
The entrepreneurs who attended the firm’s Founders of Color Summit demonstrate that “what is lacking for Black founders is opportunity and investment, not talent,” he said.
Hornik said more venture firms need to intentionally create opportunities to meet founders they would not otherwise encounter, whether through events or by bringing more investors into direct conversations with underrepresented entrepreneurs.
Simply agreeing that bias exists, he said, won’t change investment outcomes.
“I don’t think there is a single white VC I respect who has funded a large cohort of Black founders, myself included,” Hornik said. “I can certainly do better.”
Because venture investing is inherently subjective, Hornik argues investors must actively push back against the implicit bias that can shape sourcing and partnership discussions. The funding statistics for Black founders won’t change unless investors are “intentional about the problem,” he said.
That view is echoed by Brahm Rhodes, co-founder and general partner of Fictive Ventures, who believes that the many public commitments made by firms to back more Black founders in the summer of 2020 following George Floyd’s death were “performative and not permanent.”
The “unironic and quick” retreat in the years since has been actively harmful to Black founders, he said. Going forward, the industry needs to make truly structural changes to see long-term improvement.
“The warm intro network is the biggest filter in venture, and it’s viewed as an asset, not a structural problem,” he said. “If you’re inside, you get meetings. If you’re not, you don’t, no matter how strong the company is. Pattern matching gets the headlines, but it’s downstream of who walks through the door.”
Rhodes argues that many venture capital funds treat sourcing as a “passive intake.”
In contrast, funds that systematically expand their top-of-funnel reach beyond traditional networks tend to discover companies that competitors miss.
That’s not a diversity initiative, he noted, but a distinct “information advantage.”
Break down barriers before the pitch
For Garry Johnson III, managing partner at Bison Venture Partners, a quality often overlooked by investors is resourcefulness. Having built a startup himself before becoming an investor, Johnson said many Black founders learn to build high-quality businesses with far less capital than their peers.
“Black founders innovate at the same quality and scalability as others, with a fraction of the capital,” he said.
Ironically, that same scrappiness often stymies Black founders during the pitch process, according to Charlie O’Donnell, founder and general partner at Brooklyn Bridge Ventures and the author of “Founder Unfriendly: What Investors Won’t Tell You About Getting Funded.”
O’Donnell argues that many of the biggest obstacles emerge well before founders ever walk into a pitch meeting, though they continue there.
Venture firms recruit heavily from elite universities where Black computer science students make up only a small share of the student body, he said, while the broader tech ecosystem in Silicon Valley can feel unwelcoming to many Black engineers.
“Silicon Valley itself is alienating,” O’Donnell said. “The Bay Area has no meaningful Black community, the interview panels are all-white, the lunchroom is all-white, and the neighborhoods are all-white. Qualified Black engineers rationally choose to work somewhere they won’t be isolated.”
“Not wanting to be the only Black person in the room isn’t a failure of ambition,” he added. “It’s a reasonable response to a visible signal about what the environment will be like.”
That disparity continues into the fundraising process itself, according to O’Donnell, who argues that underrepresented founders often ask for less capital and make more conservative projections because they’ve spent their careers facing greater scrutiny and are often expected to justify every dollar.
Venture investors, however, are by their very nature looking for founders who pitch ambitious, risky, fund-returning visions.
As one example, O’Donnell recalled a Black urban mobility startup founder whose pitch to VCs became caught between describing the large company he hoped to build and the modest business he had already created on the path to profitability.
The founder was “pitching the way someone pitches when they’ve been taught that financial responsibility matters, but he was pitching in front of people who don’t care about financial responsibility at all,” he said. “They care about whether — if the risk was ramped up high enough — this could return a fund.”
Change the funding playbook
Many investors and Black founders who spoke with Crunchbase News came to a similar conclusion: Improving venture outcomes for underrepresented founders will require changes on both sides of the table, with investors broadening who they meet and founders building businesses that make it increasingly difficult to overlook them.
For venture firms, that starts with intentionally expanding how deals are sourced, rather than relying on warm introductions and longstanding networks.
Khadijah Robinson, general partner at Fictive Ventures, argues that the responsibility for changing outcomes rests primarily with the institutions that control the vast majority of venture capital.
“Venture firms led by white people and ‘model minorities’ should be asked the hard questions,” said Robinson, whose early-stage venture fund is designed to back Black entrepreneurs. “Their track records should be examined. Their implicit and explicit bias should be called out and they should have to answer for it.”
Robinson believes firms need to do more than wait for investment-ready companies to appear. Instead, she said, they should actively expand their sourcing pipelines and create programs that help founders reach the stage where they’re ready to raise institutional capital.
For founders, her advice is pragmatic. Entrepreneurs should spend less time chasing investors and more time building businesses customers want, she said.
“Black founders need to relentlessly pursue sales and customers as they have been indoctrinated to pursue investors,” she said, arguing that strong commercial traction gives investors “less of a choice but to invest” once the metrics become undeniable.
Rhodes, the general partner at Fictive Ventures, also offered a reminder that venture capital is only one potential financing path. Before pursuing that path to funding, startup founders should first determine whether their business actually fits the venture capital model and the growth expectations that come with it, he said.
The venture model is built around risk-taking, he noted, but there’s a double standard for white and non-white entrepreneurs: “A Black founder’s first failure gets treated as confirmation,” he said. “A white founder’s first failure gets treated as experience.”
Still, if a Black founder is determined that venture capital is the right financing source, he or she should recognize that investors are buying a stake in the future outcome of the business.
That means personal backgrounds, stories and community impacts only matter to investors in so much as they serve to predict a financial return. “Nobody is investing in you just because you’re Black,” Rhodes said.
In fact, he believes that investors who frame their investment decisions around founder identity are typically the first to “disappear in a downturn.”
Instead, Rhodes advises founders to focus on finding and building for the investors who “truly understand” the business and are committed to helping build it over the long term.
That’s a view echoed by Kidder. “Focus on the build, get creative to show early proof points … build and leverage relationships where you’ve built trust and delivered results to seek out investors who believe in you and what you’re building,” she said. “And, don’t let the stats dissuade you from the dream. Trust your gut and focus on delivering sustainable results.”
Related Crunchbase query:
Related reading:
- Crunchbase Data: Venture Dollars For Black Startup Founders Stay Scarce Despite AI Funding Boom
- ‘This System Wasn’t Built For Me’: Black Founders Became Investors To Change Venture Capital
Illustration: Dom Guzman
