The first question investors asked me in my early months of pitching was, “Where are you from?”

The accent gave me away every time.

Following the failed 2020 revolution in Belarus, I moved my company, , to Estonia. I arrived in Estonia with no English, no network and no understanding of the Western startup world. I spent months studying the language, practicing daily to improve my pronunciation and confidence.

Even with my very basic English, I started pitching immediately. I met an angel who decided to invest after just one pitch. Only half a year after our relocation, we closed our first round of $250,000.

In today’s market, where early-stage capital is shrinking, your ability to communicate is as critical as your product. Forty-four percent of U.S. unicorn founders are immigrants, and many of them started as outsiders. You may not “look the part,” but that doesn’t have to stop you from raising money. It certainly didn’t stop me.

From that experience, here are three lessons that I believe are highly valuable for any founder aiming to stand out.

Position yourself as a problem solver, not a capital-raiser

Investors meet hundreds of founders each year. Most of them open with how much they’re raising, not why they exist. When I started framing myself as someone obsessed with solving a real communication problem, not someone asking for capital, everything changed.

People invest in clarity and conviction. Instead of limiting myself to talking about market size or monetization, I illustrated the problem: how speech anxiety, accents and vocal tension limit people’s confidence globally. When your story is rooted in a genuine mission, your accent, location or background stops being a liability and becomes part of the proof.

Use body language to communicate confidence

How you carry yourself speaks louder than your words. Investors read it instantly. For example, if you lean back when challenged, it looks defensive. That’s why when I answer questions, I lean slightly forward, smile and nod. It signals that I’m engaged and listening instead of trying to protect myself.

Confidence also shows up in stillness. When you know your material, you don’t need to over-gesture. Remember that the goal is not to perform, but to connect. Smile first, listen fully and never interrupt. These small actions create a sense of trust long before you start talking about numbers.

The studies we relied on in product development show that voices with a lower pitch are perceived as 40% more confident and authoritative. Founders don’t need to fake that, but they can train it, the same way they can train their pitch deck.

Use pitch competitions as leverage

As I worked on my communication skills, pitch competitions became my springboard. They didn’t guarantee investment, but they built momentum. And in three first years, we won six: , , StartupFair, AWS AI Challenge, the European AI Startup Program by , and . Those events brought us $700,000 and connections that led directly to our seed round.

Beyond the funding, there’s enormous value in visibility. By participating in these competitions, you get feedback, credibility and stage time. All of that accelerates learning and helps you make your story resonate across languages, markets and personalities.

When you don’t sound like an insider, raising capital is about clarity, control and presence. Investors may notice your accent in the first five seconds, but if you master those next five minutes, they’ll remember your idea, not where you came from.

Founders are obsessed with anxiously trying to get in front of investors, but anxiety kills a sale. You’ve already heard the advice from a startup mentor: practice your pitch, find your own mentors, and get feedback on your ideas.

In my experience, ideas and passion are key, but it’s your polished soft skills that actually let you show that passion to anybody.

is the co-founder and CEO of , a soft skills AI coaching startup. The company has more than 4 million downloads and 50,000 subscribers worldwide. His journey is deeply personal; he was bullied for unclear diction at school, which inspired his mission to help people communicate better. After being forced to flee his home country following the 2020 revolution, Lahoika arrived in Estonia with minimal command of English and used his own app to train his voice, securing his first round of funding within just six months. The winner of the AI Challenge and x European AI Startup Program, Vocal Image recently raised a $3.6 million seed round led by (France) and scaled to more than $14 million ARR.

Related reading:

• The Immigrant Edge: How Foreign-Born Entrepreneurs Drive America’s Unicorn Boom
• New To Silicon Valley? What I Wish I’d Known As An Immigrant Founder Back In 2017

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This report was produced through a collaboration between the California Partners Project, illumyn Impact and Crunchbase.��

Executive summary

If social media has taught us anything, it’s that new technologies can have widespread and often unanticipated effects. They can change not only how we work but also how we think and how we relate to each other.

Artificial intelligence has an unprecedented potential to shape our future in exciting and unforeseeable ways. As business leaders and government agencies around the world grapple with the responsibility of managing the risks that accompany the promised rewards of AI, one immediate and place to start is building a diverse board of directors. Yet our research indicates that, on that front, AI company boards fall woefully short.

Boards that fail to reflect a wide range of experiences and viewpoints are not well-positioned to oversee companies whose products may determine how bank loan applications are evaluated, how healthcare issues are diagnosed, or how educational resources are allocated. Although no single measure can ensure responsible AI development, diverse board leadership is vital for companies creating technologies that will fundamentally reshape how we live, work and interact.

Within this study, we look at gender diversity, which is reasonably measurable, as a proxy for diversity of perspectives, life experience, areas of expertise and other demographics. To understand the gender mix on AI boards, we analyzed the board composition of more than 140 AI companies headquartered in California, where venture-backed AI development is concentrated. Our study focused on 102 private companies that have raised at least $50 million in cumulative funding. As we’ve seen time and again, transformative innovations are as likely to come from today’s nascent startups as they are from established industry leaders. Governance of these companies during their high-growth, pre-IPO period is as it is after they go public. We also looked at the boards of 39 publicly traded AI companies for comparative purposes.

Our analysis revealed a striking lack of gender diversity among the people who govern some of the world’s most influential AI startups. Women comprise only 15% of the boards of private AI companies. More than 40% of these private boards don’t have any women directors.

Two root causes contribute to this gender disparity — one structural and one behavioral. First, investors and founders collectively hold the majority of private company board seats, and women are still underrepresented in those categories. Second, when appointing independent directors, boards often limit their consideration to familiar candidates instead of seeking qualified experts outside their immediate networks.

The good news: There are plenty of executive women and people of color on the cutting edge of AI innovation who are ready to bring their voices and operating expertise to the boardroom.

Companies that prioritize building a diverse board need only to look beyond their existing networks to find a wealth of AI board talent. Consider this precedent: Five years ago, one-third of all had no women board members. With focus and effort, all-male boards are now the rare exception.

Given the rapid pace of AI development, companies need to act now, while the technology and its applications are still emerging. CEOs and board members who bring more women and people of color into their boardrooms will help create a productive and healthy AI-powered future for all of us.

Key findings

Among the AI companies headquartered in California included in our study:

• 15% of private company board members are women;
• 43% of private company boards don’t include any women directors;
• Women who serve on private company boards are most likely to hold an independent director seat;
• 26% of private company boards don’t include any independent directors; and
• Publicly traded companies typically have more gender-diverse boards than private companies, but still average only two women per eight-person board.

Women average just one seat in AI boardrooms

Across all of the California-based AI private companies studied, women hold an average of one seat on a six-person board. Among 102 private companies, only five boards (5%) have an equal or greater number of women than men in the boardroom.

More than 40% of private AI companies have all-male boards

Among the over 100 privately held AI companies headquartered in California included in our study, 44 (43%) don’t have any women in the boardroom.

Gender diversity is slightly higher on the boards of companies with more capital. Among those with cumulative funding of at least $50 million but less than $100 million, 62% have all-male boards. For companies with at least $100 million in funding, that number drops to 32%. This shift likely stems from the addition of independent directors who bring operational and market expertise.

Among publicly traded companies, women hold an average of two board seats, double the average among private company boards. suggests that, to capture the full economic benefits of diversity, boards should include at least three women directors. Just half of the public companies we studied meet that threshold.

For private company boards, independent director appointments offer the fastest route to diversity

Most private company board seats (72%) are held by company executives (the CEO and co-founders, typically) and early investors. Women hold only 10% of these board seats, a reflection of the underrepresentation of women among venture capital investors and the entrepreneurs they fund. Women hold less than in venture capital firms. Companies with women-only founders secured just 3% of AI venture funding in 2023, a number stagnant since 2015.

More than half (55%) of the women directors included in our study hold independent board seats. That is, they are neither tied to the company’s founding or management team nor investors in the company. Whereas public companies must have a minimum number of independent directors, private companies have no such requirements. Therefore, independent directors are typically added later in a company’s lifecycle, often as part of preparation for an IPO. The percentage of companies without any independent directors decreases as the level of funding increases — from 36% for those with $50 million to $99 million to 21% for those with $100 million or more.

Our findings suggest that women are more likely to be appointed to private company AI boards as the second independent director. On boards with only one independent director, women hold 17% of those independent director seats. Among companies with more than one independent director, 67% had at least one woman in that role.

Summary

Women are underrepresented on the boards of AI companies — especially high-growth, earlier-stage startups. While board diversity is not a panacea, it is one essential element for the companies developing technology with the potential to influence society in profound ways.

To increase the number of women board members, companies should:

• Accelerate the appointment of independent directors;
• Commit to adding directors who expand the diversity of perspectives, skills and experiences on the board; and
• Reach outside existing networks to identify well-qualified candidates.

Companies don’t need to trade off technical expertise and governance experience to bring diverse voices into their AI boardrooms. They simply need to look beyond their immediate networks.

Methodology

This study follows the methodology utilized in the .

Leveraging the Crunchbase database, we identified 409 companies in the AI industry with headquarters in California. Among them were 40 publicly traded companies and 369 privately held companies with at least $50 million in cumulative funding as of July 1, 2024. To ensure that each company’s board profile was current, we included only companies that publish their board of directors on their website.

We then referenced company website data, Crunchbase profiles and other publicly available information to characterize the board members. The study included only board directors; board observers and/or advisers were excluded from the data set. For private company boards, we segmented board members according to type of board seat: executive, investor or independent. In the few cases in which founders and past executives remained on the board despite no longer having an operating role at the company, we classified them as “executive directors” in recognition of their original relationship to the company. We identified gender by referencing professional profiles on Crunchbase and, when not available, other sites.

About the authors

Co-founded by California First Partner and Olivia Morgan in partnership with the people of California, the is dedicated to championing gender equity across the state and ensuring our state’s media and technology industries are a force for good in the lives of all children. The California Partners Project tracks and spotlights women’s representation on corporate boards and offers an Inclusive Boards Playbook Series developed in partnership with ’s with strategies for board refreshment and culture-building. For more information about the nonprofit organization, visit . Connect with the California Partners Project on and .

is a predictive intelligence solution that forecasts private-market movements using the unique combination of live private company data, AI and market activity from more than 80 million users. It helps investors, dealmakers and analysts be the first to find and act on opportunities. To learn more, visit and follow Crunchbase on and .

(formerly Him For Her) is a social impact organization with a mission to diversify the board ecosystem, which is building and shaping the future: from healthcare, to AI, to climate change and beyond. Drawing from its ever-growing referral-based talent network of 8,000+ under-networked executives, a third of whom are women of color, makes highly curated introductions that bring fresh expertise into the boardroom. illumyn Impact is proud to partner with 100+ leading private equity and venture capital firms. A 501c3 corporation, illumyn Impact operates through the generosity of its founding partners , , , , , , Starboard Value and Tiger Global Impact Ventures, and supporters like and , , , and . Its sister organization,, supports underrepresented executives in some of the world’s largest companies through its corporate boardroom excellence fellowship program.

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Twenty years ago, the landscape of angel investing bore scant traces of female presence, with women representing a mere of all angel investors and 3% of funded companies. Fast-forward to 2022, and the scenario has transformed dramatically, with women now accounting for of angel investors and 31% of angel-funded companies.

This shift is not just a numeric increase; it’s a seismic evolution reflecting broader changes in society and the business world.

Our own journey started in 2004 with , a national angel network that invests exclusively in early-stage companies led by women.

We were met with much skepticism. Yet, our conviction was fueled by two undeniable trends: the burgeoning number of women-led businesses, and the growing capital, skills and networks of women to invest in startups.

Since then, the idea of investing in women-led businesses has gained substantial traction. Golden Seeds’ investments of more than $180 million in nearly 250 companies —��which have in total raised an additional $2 billion — stand as a testament to the economic and social impact of women entrepreneurs and investors.

However, declaring success is premature. Despite the progress in seed investing, there is still a major disconnect between the innovation women are leading and the pace at which venture capital is realizing these opportunities.

How is it possible that women can lead half of the new businesses in the U.S. and still more than of VC-funded deals in 2023 went to all-male teams? It’s equal parts baffling and frustrating.

Reflecting on our experiences, including both successes and challenges, we’ve identified meaningful ways the venture capital community can join us in our mission to direct additional capital and other forms of support to women-led startups.

Insights for the venture ecosystem

First, the compelling impact of women’s leadership on company performance cannot be overstated. Research consistently shows that gender-diverse teams and companies led by women outperform their peers financially. Last year, reported that companies with gender-diverse executive teams .

Similarly, found that those led by men over the past decade. and further solidify this evidence, showing that gender-balanced boardrooms are nearly 20% more likely to improve business outcomes, and businesses founded by women deliver 2.5x higher revenue per dollar invested than those founded by all men.

This data isn’t just numbers — it’s a clear indication that diversity is a strategic advantage.

Second, the venture capital world has often relied on pattern recognition — investing in entrepreneurs who fit a familiar mold, often favoring serial entrepreneurs with a track record of successful exits. This methodology, while comfortable, has led to missed opportunities and overlooked innovation. The bias has inadvertently sidelined some of the most promising ideas, particularly those developed by women and minorities.

Third, the venture ecosystem has traditionally been concentrated on the coasts, overlooking the rich diversity and potential of startups nationwide. In 2022, of funded angel deals occurred outside the traditional VC hubs, indicating a significant pool of untapped potential across the country.

Lastly, the inclusion of more women in decision-making roles within VC firms can drastically alter funding dynamics. Research from ’s indicates that when a VC firm includes at least one woman partner, the likelihood of a woman entrepreneur being funded increases by 2x to 3x. Yet, women constitute less than of decision-makers in U.S. VC firms, underscoring a critical area for improvement.

Toward a more inclusive future

After two decades of pioneering investment in women-led startups, we stand at a crossroads where investing in women is not just an emerging trend but a mature movement. Today, with robust data and the cumulative wisdom of years, the impact of women as entrepreneurs and investors is undeniable. Yet, the venture community’s evolution toward gender equity and inclusivity is still ongoing.

To build a better venture ecosystem, what’s needed is not just recognition of past successes but an unwavering commitment to open new pathways for diverse entrepreneurs to access necessary funding and support.

The future of venture capital, infused with the insights and leadership of women, promises not just better outcomes for women entrepreneurs but unparalleled economic growth and innovation for all.

is co-CEO and managing partner of , an investment organization that invests in women-led startups. At Golden Seeds, she manages the national network of nearly 300 members and has been a frequent speaker domestically and internationally about early-stage investing and women entrepreneurs. Previously, she served as executive vice president and chief marketing officer at and was an executive at the ��

is co-CEO and managing partner of Golden Seeds, where she manages the deal flow and post-investment processes. She is also a general partner of three Golden Seeds venture funds that invest in early-stage companies with gender-diverse management teams.�� Previously, Corkran was managing director at Credit Suisse Asset Management, , and . She currently serves on the board of directors for , a commercial vehicle inventory and marketing solutions company, and , a machine-learning company that uses conversational AI to transform housing and healthcare.��

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Per data, just seven U.S. companies with female founders joined the unicorn club in 2023 and 2024. That’s a precipitous decline from the peak year of 2021, when dozens of female-founded American companies met or exceeded the $1 billion level for the first time, amid a global boom for the category.

Who’s joining the unicorn board

The most recent female-founded addition to the unicorn board is Redwood City, California-based , provider of a student transportation platform used by school districts across the country. The 9-year-old company picked up $140 million in a Series E round in January at a $1.3 billion valuation.

Led by co-founder and CEO , Zum tries to help school districts increase efficiencies and reduce the costs of managing bus fleets through its AI-enabled platform. The technology gives districts visibility so they can optimize routes and even deliver real-time updates to parents.

Others include:

• , a startup that trains foundational models to develop AI agents, landed $200 million in a September Series B round at a valuation of more than $1 billion. The 3-year-old, San Francisco-based company’s co-founder and CEO is .
• Green hydrogen company secured $250 million a year ago at a unicorn valuation in a Series C led by . The 5-year-old company, which lists its chief compliance officer, , as a co-founder, designs and manufactures proton exchange membrane electrolyzer systems, which are used to split water through electrolysis to create hydrogen.
• Los Angeles-based , a provider of checkout-free parking, raised $1.05 billion in an October Series C, along with $650 million of debt financing. One of its co-founders is , currently serving as chief integration officer.
• San Francisco-based , a developer platform that uses AI to complete code, has raised $222 million in known funding at a valuation of at least $1.2 billion. The 8-year-old company lists as co-founder and VP of design.
• , founded in 2022, has raised $415 million to date at a last reported valuation of at least $1 billion. One of the company’s co-founders is , who also served as CTO. Parmar is also co-founder of , founded last year, which came out of stealth with $56.5 million in funding in December.
• New York-based fertility clinic network raised $100 million led by . The company, which plans to expand its clinic footprint, was valued at $1.8 billion. Its founders are and .

Yes, there’s a lot of AI

Looking at the list above, it’s clear artificial intelligence is a popular core or enabling technology among new, female-founded unicorns.

This isn’t entirely surprising, given that AI is a common theme among all global unicorns minted over the past year. As of late October, 1 in 5 of the new billion-dollar startups to join The Crunchbase ������Ƶ in 2023 were artificial intelligence companies, an analysis of the board shows.

Notably, however, AI is even more highly represented among new female-founded unicorns. Of the seven listed above, three – Adept AI, Replit and Imbue — are essentially pure-play AI technology startups. Two more — Metropolis and Zum — list AI as an enabling technology.

Given the small size of the sample set, it may be wise to avoid drawing too many inferences from the high representation of AI on the list. Clearly, however, it’s safe to say that female founders and executives are playing a leading role in the space. This is evidenced not just by new unicorns but also by more established startups such as , which has raised more than $10.3 billion to date with taking a lead role as co-founder and president.

More unicorns ahead?

Given the slow pace of creation for new female-founded unicorns in recent quarters, it’s also reasonable to both hope and expect the numbers will improve. After all, last year was a comparatively weak period for venture funding overall.

The contraction was most pronounced for the kinds of large, later-stage rounds that most frequently come with unicorn valuations. As a result, we’re seeing a drop in unicorn creation across the board. Given the cyclical nature of startup investment, it should eventually be due for a pickup.

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Venture funding to Black-founded U.S. startups last year totaled only $705 million — marking the first time since 2016 that the figure failed to even reach $1 billion, data shows.

The decline in capital to Black-founded companies greatly outpaces the overall decline in startup funding. While total venture dollars in the U.S. fell 37% last year, funding to Black-founded startups dropped a staggering 71%, according to Crunchbase data.

Last year’s total investment in Black-founded startups in the U.S. marks the lowest amount since such startups raised only $582 million in 2016. The drop in total dollars also meant Black-founded startups received their lowest share in the venture market since at least 2016, per Crunchbase.

Black-founded startups received less than 0.5% of the $140.4 billion in venture funding all U.S.-based startups received last year.

In 2021, Black-founded startups received 1.4% of all U.S. venture funding. In 2022, it was 1.1%.

“Unfortunately, nothing is really surprising,” said , who along with took over the from last year. The fund is dedicated to supporting Black and Latinx founders.

“The fact it is not trending in the right direction is certainly a problem,” he said.

Same old

The numbers stand in stark contrast to what many VC firms and strategic investors promised nearly four years ago when they pledged more diversity in their venture spending after the death of George Floyd.

“At the time people said they would do something, but when there’s a downturn funding always goes back to what it always does,” said Judge, who is also a co-founder of incubation center .

When one considers 13% of the U.S. population is Black and more than $140 billion in venture capital was involved in the U.S. last year, it should be reasonable to expect Black funding numbers to be around $18 billion, Judge said.

“Funding was less than $1 billion a year,” he said. “That means we have about a $17 billion problem. People understand money, so they should understand that. Now we need a $17 billion solution.”

Judge added that one way to find that solution is to show the investors the return potential of startups with diverse leadership.

“People just haven’t realized the financial rewards” of investing in startups with diverse leadership, Judge said. “Minority-led companies consistently outperform.”

Judge noted that many minority-led companies excel at what investors are looking for now — cash efficiency and low burn rate. Minority-led companies often can stretch their dollars further and for longer, he said.

In the open fund portfolio, 57% of its companies are Black-founded, and on average they are experiencing 100% revenue growth year to year and have at least two years of runway.

Declining dollars

While the year-to-year numbers are striking, they are even more dramatic when one considers�� funding to Black founders totaled $4.9 billion in 2021 — a record year for venture capital spending. Last year’s number represents an astonishing 86% drop from 2021.

All stages were down when it came to funding to Black-founded startups, Crunchbase data shows.

Angel and seed rounds dropped 51% compared to 2022, with only $148 million raised.

Both early-stage and late-stage rounds saw a more pronounced drop. Late-stage rounds fell 73% with $259 million raised, while early-stage rounds plummeted 74% with a paltry $298 million raised.

The late-stage numbers meant a scant 0.3% of all late-stage funding in the U.S. went to Black-founded startups.

, co-founder of in Atlanta — typically a leading region for funding to Black founders — said that it is hard to conclusively say why the numbers are down. Still, one hypothesis is that some startups funded in the wake of Floyd’s death and subsequent racial justice movement, prompting more VCs to look more into DEI initiatives, may be having a difficult time raising later rounds now, in a tougher market that has never favored Black founders.

“Some of the dynamics that existed downstream (before Floyd) that made it difficult to get funding are still there,” said Buffington, noting the networking needed to help consummate larger rounds.

The numbers seem to bear that out as 82% of all rounds raised by Black-founded startups in the U.S. last year were seed or angel rounds, while only 3% were late-stage fundraisings.

Big rounds dwindle

It is important to note large late-stage growth rounds usually make up the smallest percentage of rounds due to the normally high-dollar value. That also makes them the most difficult to raise.

However, last year saw just one $100 million-plus round by a Black-founded startup in the U.S., and only three rounds of more than $30 million.

For comparison’s sake, last week alone saw seven rounds of $100 million or more raised by U.S.-based startups.

In 2023, the largest rounds to Black-founded startups in the U.S. included:

• San Francisco-based investment management platform raising a $133 million venture round led by .
• Los Angeles-based media firm locked up a $90 million round co-led by and .
• San Francisco-based , developer of an AI financial planning tool for underserved Americans, raised a $33 million Series A led by .

Those raises would seem to illustrate the key reason funding to Black-founded startups saw such a dramatic decline — a dearth of large rounds. Without such rounds, funding numbers usually drop as it is difficult for seed and early-stage rounds to make a significant difference.

In 2021 and 2022 for example, there were a total of 17 rounds that went to Black-founded startups that were $100 million or more.

Deal volume plummets

While money talks — and gets people talking — deal volume also paints a poor picture when it comes to Black founders getting funded.

The 173 rounds funded last year — a 48% drop from 2022 — is the lowest deal volume in at least the past eight years. Likewise, both seed/angel and early-stage funding also hit their lowest totals in at least the past eight years.

The shrinking deal volume does not come as a surprise to investors. , co-founder of , said he sees fewer deals getting done, with most people focusing on reinvesting in current founders who have solvent businesses.

In a down market, “it’s going to seem a lot more extreme on the Black founders, as it is on others, because there’s not as many deals to re-up into that are led by Black founders,” Norman said.

One of the important aspects about deal volume is that if early deal volume drops, that means there will be fewer companies eventually ready to raise larger late-stage growth rounds — which in turn will keep funding levels decreasing.

Of course, that would be consistent with what has gone on the past two years.

Another factor? Consumer startup funding slowdown

Slowing investment to a host of consumer-facing sectors, from e-commerce to the app economy, may be another factor behind the recent contraction in funding to Black-founded startups.

In the past three years, several of the most high-profile and heavily funded startups with Black founders are consumer-facing companies. But most last raised financing more than two years ago.

This includes:

• Scheduling app , founded by Atlanta entrepreneur , has raised $350 million to date. But its most recent — and primary — funding round was just over three years ago.
• Lingerie brand , launched by pop mogul , has raised $310 million to date, with consumer-focused investor as a lead backer. However, the El Segundo, California-based company hasn’t raised a known round since its Series C two years ago.
• , a value-based healthcare provider led by physician and co-founder , is the biggest funding recipient, with $891 million in known equity investment. However, the Brooklyn-based company raised its most recent disclosed-size financing — a $400 million -led — in September 2021.

Several other well-funded consumer-facing startups with Black founders have also not secured a fresh round for more than two years. This includes New York-based barbershop app , backyard cottage purveyor Gardena, California’s , and , a San Francisco-headquartered provider of payment cards and money transfer services in multiple African countries.

Notably, while overall U.S. startup investment fell sharply last year, not all sectors are following the same pattern. Some areas, such as AI, have heated up significantly. Others, like biotech and�� robotics, are down but still see significant deal flow.

Meanwhile, a lot of once-hot spaces, like consumer-facing apps and direct-to-consumer e-commerce, have seen much steeper declines. Black-founded companies active in these spaces have not been spared the impact of this broad downturn.

— Joanna Glasner contributed to this article.

Methodology

Funding amounts and counts for the most recent year were collected through Feb. 23, 2024.

The data contained in this report comes directly from Crunchbase, and is based on reported data provided by our Diversity Spotlight partners, venture partners, our community network and news sources. The data in this report is focused on the U.S. market for underrepresented minorities, namely Black-/African-American-founded companies.

Crunchbase’s dataset is constantly expanding, but there are gaps. A company may not have founders listed, or the Diversity Spotlight data may not be updated on its Crunchbase profile. We do believe we are missing companies, especially at the early stages of funding.

If you notice missing data please reach out to spotlight@crunchbase.com or verify with your company email to update your company’s Diversity Spotlight tags directly onsite.

Crunchbase, like all databases of private-market transactions, has a documented pattern of reporting delays. The data for 2023 will increase over time relative to previous years. As data is added to Crunchbase over time, some of the numbers in this report may shift.

Related reading:

• Special Series: VC Dollars To Black Startup Founders Fell More Than 50% In 2022
• Special Series: Black-Founded Startups Raised Large Rounds, Added 3 Unicorns in 2022
• Special Series: Black-Founded Startups Attract Funding By Filling Gaps In Health Care Equity
• ������Ƶ Black Startup Founders Quadrupled In Past Year, But Remains Elusive
• Black Women Still Receive Just A Tiny Fraction Of VC Funding Despite 5-Year High
• Culture, Colleges And Corporations Help Push Georgia To The Top In VC ������Ƶ Black Founders
• Something Ventured: How Black Founders Can Increase Their Chances Of Raising Capital

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A male venture capitalist once , “I don’t want to talk about vaginas every Monday morning in my partner meeting.”

Although nearly every woman has a vagina, the word itself can be enough to prevent men, the , from investing in vagina-based innovations — or women’s health in general. Female founders received only of all venture capital funding in 2022 and female founders of women’s health companies received even less than that.

However, when it comes to innovation and improvements for women, female-led women’s health companies are poised to succeed.

Women are of the health care workforce, make of household health care decisions, and spend more per-capita on health care than men. They , are to have chronic health care conditions, and see health care providers than men.

They are also more likely than men to experience, ��������𾱳����’s,, and, among others. Other conditions — such as, and — affect them exclusively.

Women’s intuition plays a role

Women are so intertwined with health care — as decision-makers, patients and workers — that they have the insight to identify white spaces, drive innovation and understand the direct and indirect costs of ignoring women’s health.

For example, women: a role with a estimated value in the U.S. and globally. Unhealthy women might not have the emotional, mental, or physical abilities to keep those in their care healthy as well, including children, parents, or in-laws.

They also might not be able to work to their full potential, or even work at all: If all paid working women in the United States did not — or could not — work for a single day, the country would lose almost in terms of GDP. Yet, women with period pain saw nearly in lost productivity per year while of surveyed women with endometriosis reported missing work. Quantified, the estimated indirect costs of PMS are per woman and greater than for endometriosis.

Women helping women

The best people to understand, experience and address this need for healthy women are one and the same: women.

Female leadership has already proven its value: Women in leadership or board roles have , , and than mostly or all–male teams. Women-led companies also had and than all-male teams and generated of revenue per dollar raised compared to all-male teams’ 31 cents.

Thus, female-led health care companies address an otherwise overlooked market and have successful, skillful leaders at their helm. They have already started to see major successes too: became the first while , and had some of the largest fundraising rounds for women’s health companies ever.

Acquisitions of by , by , by , and by show that established companies are recognizing the value of women’s health — and may encourage others to follow. Plus, all these startups were founded and/or are led by women.

While male investors may not want to say the word vagina, their historic lack of focus on and funding for women’s health has created a massive market vacuum. Female leaders, especially those of women’s health companies, can successfully capitalize on this overlooked opportunity and, in the process, improve health outcomes for women everywhere.

�� is the co-founder and managing partner of , which invests in early-stage women’s health and female-led life science ventures. For 30-plus years, Greub has invested in public and private life science companies as an institutional investor, a corporate M&A executive, a hedge fund analyst, and a private venture investor. She graduated from and .

Illustration: Dom Guzman

Editor’s note: This article is the last of our three-part series on the state of venture investment to Black-founded startups in 2022. Driving these reports are data from Crunchbase’s feature, which helps indicate diversity in startups’ and investment firms’ leadership teams. Part One introduced the funding landscape for Black-founded startups in 2022, and Part Two checked out the largest rounds raised by Black-founded startups. — Special Projects Editor Christine Kilpatrick

and are part of a rare club.

The pair founded , a career marketplace that connects nurses with medical organizations to combat an ongoing massive worker shortage in health care. The company raised $80 million in 2022, making it one of the 52 Black-founded health care companies to receive funding that year (according to Crunchbase data).��

Between 2016 and 2022, Black-founded companies made up around 1.7% of all venture-backed deals in the health care space, Crunchbase data shows. In 2022, as health care startups overall raised more than $555 billion, Black-founded startups saw only 1.3% of that money.

“You can acknowledge that the bias exists because the data proves it, but you actually have to compartmentalize it mentally and not dwell on it,” said Abuzeid. “It doesn’t actually help you as an individual CEO.”

It’s a tough reality to ignore when Black people have historically been abused by the health care system, leading to poor health outcomes. The infant mortality rate for Black babies born to rich families than that of white babies born to poor families. Clinical trials meant to test the safety and efficacy of drugs and — one study found that in 10 years of cancer drug clinical trials, .

You may wonder why founder diversity in health care is important when vaccines and drugs work inside the body.

“If, every time someone got into a particular car and they were fine, and then a Black person drove that car and had a 1 in 4 chance of crashing every single time, would you be comfortable with people driving that car at all?” said partner Kathryne Cooper, who focuses on Black-founded health care companies. “If it’s not safe for one group, it’s not actually safe for any of us.”

Filling the gaps in health care equity

Most Americans , which is littered with friction points that range from inconvenient to medically dangerous.

For example, Incredible Health, a 6-year-old startup, is focusing on a problem that has long plagued the health care industry: low nursing staffing rates. Lack of adequate staffing makes it harder for all patients to find timely care. A shortage of staff also means health professionals spend less time with each patient.��

But it’s a problem most salient in — large swathes of the U.S. where there aren’t enough hospitals, doctors and mental health professionals to take care of the population. It can often lead to medical neglect, especially for chronic issues — Black patients with diabetes, for example, than others, despite it being .��

According to Crunchbase data, 21% of the 28 largest funding rounds to Black-founded companies in 2022 went toward health care companies fixing small gaps in the health care system. , which provides holistic care for patients dealing with kidney disease, raised $325 million in Series E funding last year. , a mental health startup aimed at substance abuse patients, raised $50 million in Series C funding.

Incredible Health’s 2022 Series B raise was one of the largest in the health care staffing space that year. But it also came with a strategy: Abuzeid targeted technology-focused venture firms in the Bay Area with a history of funding underrepresented founders.��

“Frankly, it means that they don’t just talk the talk, they actually walk the walk,” Abuzeid said. “They’ve already proven that there isn’t some weird bias going on, and I don’t have to deal with that aspect at all.”

Closing the gap in health care funding

When funding flooded into the health care space in 2020 in a pandemic-induced frenzy, Black-founded startups saw less than 2% of it, Crunchbase data shows.

According to a report from digital health-focused investment firm , 41% of Black health care startup founders , while less than 25% of white and Asian founders said the same.

Inequity is often baked into the fundraising process — founders with connections in the venture world are more likely to get their foot in the door. Many venture firms look at past fundraising rounds to help determine whether or not they should invest, and some minority founders aren’t always able to scrape together a sizable friends and family round to launch their business.��

But some firms like , an offshoot of Nashville, Tennessee-based that is specifically dedicated to funding Black-founded health care companies, are rethinking the process. The fund details what kinds of startups it invests in, and all founders have to fill out the same form before being considered for an investment.��

“Black founders are chronically underfunded and health care is no exception,” Cooper said. “Health care affects all Americans. And if a certain group is going to be cut out from this funding, I don’t think that’s representative of all health care opportunities.”

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, a fintech startup that helps renters build credit with on-time payment reporting, was rejected 326 times by investors prior to its 2022 funding that valued the company at a billion dollars.��

Investors who passed over the company did not believe in “this idea of investing in low- to medium-income households and helping them get quality financial access to products,” said , Esusu’s co-founder and co-CEO.��

That all changed in early 2022, when Esusu raised a $130 million Series B funding led by the — just six months after announcing its Series A in 2021.��

Abbey, who grew up in the slums of Nigeria and came to the U.S. as a student, had direct experience of the impact of not having a credit history. He was not able to get a loan from a bank, so borrowed from a predatory lender.��

Around 47 million American households — representing more than 100 million people, or roughly a third of the country’s population — rent their homes. But those rental histories don’t help to build credit, said Abbey. Esusu works with property owners to help renters build their credit scores with on-time payment reporting. The company has 3.5 million rental units on its platform, and grew 300% over the past year. Esusu also provides rental assistance with 0% fees in order to support renters and avoid evictions.��

“As a society we’re not solving homelessness backwards, and the landlord also doesn’t have to evict people,” said Abbey.��

Esusu was one of three Black-founded U.S. startups that joined The Crunchbase ������Ƶ in 2022. At the top of the list was new health care unicorn Virginia-based , which raised $325 million in a round that valued the company at $2.5 billion. Somatus provides kidney care and prevention through a network of health care providers.��

Another Black-founded health care startup in recruiting, San-Francisco-based , raised $80 million last year, valuing the company at $1.7 billion.��

These three companies joined a 2022 cohort of 170 new U.S. unicorn companies, based on an analysis of Crunchbase data.

In the U.S., have a Black or African-American founder, out of 714 unicorn companies. This amounts to just 1.8% of U.S. unicorn companies.��

And in total, Black-founded startups in the U.S. raised about $2.3 billion in 2022, representing 1.1% of U.S. venture funding that year, per a recent Crunchbase News report. That’s more than a 50% drop in VC funding from 2021, while the broader U.S. funding market was down 37% over the same time period.��

Leading sectors

Behind these stark statistics are companies building key services for consumers and businesses. Leading sectors for funding in 2022 to Black-founded companies included financial services, health care, consumer goods and professional services, based on an analysis of Crunchbase data.��

San Francisco and Nigeria-based fintech unicorn , a cross-border payments platform that connects 34 countries in Africa to the broader payment ecosystem, was first valued as a unicorn in 2021. It went on to raise a $250 million Series D funding in early 2022 led by ’s that valued the company at $3 billion, making it the third most highly valued company with a Black founder alongside .��

Other Black-founded fintech and SaaS service companies that raised VC funding in 2022 include:

• San Francisco-based career service company raised a Series B of $40 million led by .��
• Atlanta workspace logistic fulfillment for e-commerce providers raised a $35 million Series B led by and .��
• An HR management platform for small businesses, Los Angeles-based , raised a $30 million Series C from .
• San Francisco-based , a service to assist the setup of preschools, raised a $25 million Series B led by .
• Oakland-based , a payment processor for utilities and government agencies, announced a Series B of $25 million led by .��

With the slower funding environment, companies tightened their belts in the latter half of 2022 to preserve cash. Only one of the companies listed here raised funding in the second half of the year. And there’s no sign of how long the U.S. venture market will have to wait to see the first Black-founded unicorn in 2023.����

Methodology

Funding amounts and counts for the most recent year were collected through Feb. 21, 2022.

The data contained in this report comes directly from Crunchbase, and is based on reported data provided by our Diversity Spotlight partners, venture partners, our community network and news sources. The data in this report is focused on the U.S. market for underrepresented minorities, namely Black-/African-American-founded companies.

Crunchbase’s dataset is constantly expanding, but there are gaps. A company may not have founders listed, or the Diversity Spotlight data may not be updated on its Crunchbase profile. We do believe we are missing companies, especially at the early stages of funding.

If you notice missing data please reach out to spotlight@crunchbase.com or verify with your company email to update your company’s Diversity Spotlight tags directly onsite.

Crunchbase, like all databases of private-market transactions, has a documented pattern of reporting delays. The data for 2022 will increase over time relative to previous years. As data is added to Crunchbase over time, some of the numbers in this report may shift.

Illustration:

After receiving a record $5.1 billion in venture capital during the height of the market in 2021, Black-founded startups based in the U.S. saw that number more than halved as VCs pulled back significantly last year.

While venture funding in the U.S. overall dropped nearly a third in 2022 — from about $337 billion to roughly $214 billion — Black-founded startups were hit disproportionately by the decline, Crunchbase data shows. Such startups saw their share of the market drop from 1.5% in 2021 to only 1.1% last year.

In general, Black-founded startups in the U.S. have struggled to gain anything above 1.1% of the venture market in the U.S. for the last several years.

“It’s like they say, when the U.S. economy has a cold, the Black community has pneumonia,” said , managing partner and co-founder of Atlanta-based , which invests in emerging markets and diverse founders. “So the numbers are not surprising.”

Deals fall

Deal count numbers do not paint a better picture for Black founders. Those numbers dropped from a high of 419 deals announced in 2021 to only 260 last year — a 38% decline. The 2022 number even represents a fall from the 403 deals announced in 2020.

Venture funding also continued to get worse as the year progressed for Black founders, until a slight pickup in the last quarter.��

While almost $1.3 billion went to Black founders in the first quarter of last year, that number fell to $184 million in the third — the lowest total since Q3 2020.

The fourth quarter saw a slight comeback, hitting $274 million.

Seen it before

The numbers are disappointing, but not shocking to those in the venture industry.

“I would say it’s not a surprise,” said , a senior associate at , an early-stage venture firm focused on investing in minority and woman founders. “Generally what happens is diverse founders are hit the most in a downturn.”

DeTommaso said there often is a “subconscious bias” during a drop in the market, where investors seek what they know and what is familiar to them — which often is not minority founders.

Along with that, it is clear this is no longer 2020, when firms and corporations — caught up in the Black Lives Matter movement in the aftermath of George Floyd’s killing — created funds and other pots of monies specifically to go to Black and other minority founders.

“It’s very clear that was top of mind at one point and not anymore,” DeTommaso said. “That was expected. That’s the human condition — you get excited and it’s top of mind. Then it goes away.”

Judge, a serial entrepreneur who has been in the tech industry for more than two decades, agrees that many have not kept their promise of funding minority-founded startups. He takes a critical view of the numbers and even the “improvement” some saw last year.

“We are so far off,” said Judge, who also is co-founder and partner at incubation center . “We are talking about (being off) by a magnitude of more than 10x. It’s like the decimal point is in the wrong place when you look at the money that goes to Black founders.”

With the Black U.S. population estimated to be about 13%, Judge questions why only 1.1% of venture dollars goes to such founders.��

He also agrees that the current downturn has made it easier for VCs to turn to their old ways of conducting business — the warm intros and closed networks that often leave Black founders out in the cold.

Investors are not doing their jobs by not opening up their sourcing, said Judge, adding that numbers show investing in a diverse set of founders creates the best returns.

“In investing you find alpha in places where other people aren’t looking,” he said. “I’m not talking about social impact, I’m talking about delivering the best returns.”

Judge, who remembers fundraising for his first company more than a decade ago, said it may be somewhat easier for Black founders to get a meeting with a VC, but it is still just as hard to finish the deal.

“It’s still difficult,” he said. “Getting in the meeting room and getting to the wire are two different things. That’s a long process and there are a lot of moments where bias can show up.”

With the numbers where they are, it’s fair to wonder if the venture world has improved for Black founders.

“I think we’ve made progress,” DeTommaso said. “I think the VC and investor base, including LPs, needs diversity.

“Things have gotten better, but they are not where they need to be,” she continued. “But it’s a slow process.”

One that seems to even stall at times.

Methodology

Funding amounts and counts for the most recent year were collected through Feb 21, 2022.

The data contained in this report comes directly from Crunchbase, and is based on reported data provided by our Diversity Spotlight partners, venture partners, our community network and news sources. The data in this report is focused on the U.S. market for underrepresented minorities, namely Black/African American-founded companies.

Crunchbase’s dataset is constantly expanding, but there are gaps. A company may not have founders listed, or the Diversity Spotlight data may not be updated on its Crunchbase profile. We do believe we are missing companies, especially at the early stages of funding.

If you notice missing data please reach out to spotlight@crunchbase.com��or verify with your company email to directly onsite.

Crunchbase, like all databases of private-market transactions, has a documented pattern of reporting delays. The data for 2022 will increase over time relative to previous years. As data is added to Crunchbase over time, some of the numbers in this report may shift.

Crunchbase’s Senior Data Editor �ұ��é Teare contributed to this report.��

Illustration:

“We’re going to invest in an underlooked asset class that is overperforming.”

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Let’s just have that sink in for a minute. It’s not about gender, it’s about being a capital-focused operation, comprised of investors wanting returns. Nothing more, nothing less.

While the 2019 stories of Glossier and Rent The Runway and The RealReal were all important amplifiers of the prowess and strength of female founders, underneath it all stands another perspective: diversity-focused funds weren’t innately impact-focused funds.

And as the year comes to a close, Crunchbase data shows what ‘overperforming’ really means: 2019 has been a historic year for female-founded unicorns, which were born at an unprecedented pace.

For context, in 2018 there were 15 unicorns born with at least one female founder. This year, there were 21 startups founded or co-founded by a female that became unicorns. The chart below shows how many companies with at least one female founder passed the $1 billion in valuation mark each year, starting in 2005.

The Companies

When we talked to beauty company founder , she said, “Beauty wasn’t a category that many [venture] firms were interested in exploring.” She added “then 2018 came, and it was a record year for venture funding in the beauty industry.”

She bet that 2019 might break the record again, and was proven right in a few ways as companies in beauty and commerce also landed billion dollar valuations (think FabFitFun and The RealReal).

Beyond beauty and commerce, female founded and co-founded unicorns born this year include , , ezCater (which we covered previously), and .

While it’s easy to be distracted by skyrocketing valuations, it’s worth noting that these companies are not immune from weaknesses and mistakes.

For example, 2019 unicorn Away was co-founded by Jen Rubio and Steph Korey, and recently was exposed for abusive management styles and working conditions from . Korey has since resigned, and former Lululemon COO and CFO Stuart Haselden took over as a chief executive alongside Rubio.

But let’s circle back to the broader issue at hand. Before these companies had to convince investors they had a $1 billion dollar idea, they had to convince the same cohort to cut a check in the first place. And that brings me to the story of Shani Dowell.

A Historic Fundraise In Tennessee

just raised $1 million in funding for her Tennessee-based edtech platform, . We typically wouldn’t cover a funding round so small, except hers is historical: the company claims that Dowell is the first black woman in Tennessee to raise more than $1 million in venture funding.

Nationally, less than 2 percent of all venture funding goes to companies led by women, and .006 percent to companies led by black women, according to the company.

Dowell’s fundraise is both a sign of progress and lack thereof, which is similar to the greater data pulls we get when we unpack diversity. For example, while female-founded unicorns are being born at an unprecedented pace, they only make up 4 percent of startups that reached a valuation of $1 billion or more in 2019.

Adding onto that, female-only founded teams are only raising $3 dollars for every $100 spent, according to Crunchbase data.

But Dowell’s story provides a glimmer of hope. She got her start through the Nashville Entrepreneur Center. This fact may support the idea that emerging programs and institutions are working, albeit slow. And the data around female-founded unicorns shows us that these companies, from an investor side, are far from a charity case, they’re vehicles for returns.

Illustration:��