The Black Lives Matter movement ignited dialogue around diversity and inclusivity, with numerous corporate entities pledging to invest and support Black-owned startups. This conversation also propelled the founding of Black-led venture capital funds to address systemic barriers to funding and bring about a shift in dynamics. But last year, the Fearless Fund, a venture capital firm that invests in female entrepreneurs of color, was sued by the American Alliance for Equal Rights. With venture capital being the second largest source of of business funding in the U.S., Black entrepreneurs’ access to capital is at stake for what is clearly a landmark case.
The Alliance particularly objected to The Fearless Foundation’s Strivers Grant that exclusively awards grants of up to $20,000 to Black women entrepreneurs. It argued that the grant is in violation of Section 1981 of the U.S. Code, which guarantees equal contractual rights without favor or discrimination based on race. The 11th Circuit Court of Appeals granted the group’s request for an injunction, temporarily halting the grant and overturning a lower court’s ruling that found that the funding was protected by the First Amendment.
Efforts to curtail venture capital expressly set aside for Black entrepreneurs have far-reaching ramifications. Only one percent of a total $215.9 billion in venture capital funding went to Black-founded companies in 2022. The gap stems from long-standing biases that have historically prevented Black Americans from securing funding and support for their entrepreneurial ideas. Even as the number of Black business owners in America increases exponentially, founders continue to struggle to raise sufficient funding. The underrepresentation of Black entrepreneurs and investors is a missed opportunity to drive innovation and engender economic growth.
The benefits of Black-owned venture capital firms are quite clear. These firms even the playing field by promoting racial diversity in the funding process, empowering Black entrepreneurs and successfully transforming startups into established companies. They provide the funds, networks, resources and opportunities that would otherwise be unavailable. It has been proven by research that Black-owned venture capital firms can significantly improve the performance of Black entrepreneurs in the venture industry.
BlackStars News has highlighted four Black-owned venture capital firms that are making a difference in the industry.
1. Fearless Fund
Fearless Fund has inadvertently become the face of Black-owned venture capital firms. Founded in 2019 by Ayana Parsons and Arian Simone, it is “built by women of color for women of color” and seeks to close the gap in venture capital funding. It invests in scalable, growth aggressive companies led by women of color at the pre-seed, seed level or series A financing level. The fund’s Fearless Strivers Grant program, which is being legally challenged was launched in partnership with Mastercard in 2021. Fearless Fund has also partnered with other prominent companies such as Bank of America, JPMorgan Chase, and Fifth Third Bank, among others.
“When we set out to start we had one clear vision in mind, and that was to change the game for women of color. Our rationale was simple. These women are the most founded, yet the least funded. They’re starting businesses at a much higher rate than any other demographic. Yet they lack access to capital, access to resources, access to networks.” Parsons explains the rationale behind Fearless Fund.
2. Visible Hands
Unlike most venture capital funds, Visible Hands is more interested in individuals than ideas, teams, or companies. It consequently provides pre-seed investment for underrepresented entrepreneurs looking to build technology-driven startups. The firm has a 14-week accelerator program that connects founders to prospective co-founding teams, industry experts, investors and a diverse business network. Visible Hands has invested in startups such as Parfait, Athlytic, Dollaride, Hearth Display, Noula, WriteSea, Plot, TANGapp since its founding three years ago.
3. The Black Angel Tech Fund
The Black Angel Tech Fund highlights the necessity of thought-provoking discourse in changing the status quo. The fund was created following a panel about the lack of Black startup founders at the 2015 Stanford Black Alumni Summit. It is leveraging national black wealth and expertise from successful African Americans to support Black startups. The fund has supported Black led technology companies including Ceek VR, On Second Thought, Bandwagon, and Omni Speech.
4. New Voices Fund
As part of the $1.6 billion acquisition deal of Sundial Brands, Richelieu Dennis insisted that Unilever invest $50 million in a fund to empower Black female business owners. They partnered to create the $100 million New Voices Fund which private equity investments from Seed to Series C rounds. The fund provides emerging women of color entrepreneurs with capital, access to a global network, and industry expertise to scale their businesses. has invested in Black women brands such as Afropunk Festival, hair care company Naturally Curly, and BeautyCon.
Dennis, in situating the importance of empowering Black women, said, “The facts about investments in women of color entrepreneurs, particularly Black women, are astonishing. Black women raised just 0.0006% of the total $424.7 billion in tech venture funding since 2009. This is unacceptable. It is why the Fund is focused on making equity investments and creating an ecosystem that empowers women of color entrepreneurs to reach their full potential by addressing three of the most pertinent issues preventing their long-term success – access, capital, expertise.”