The George Floyd killing spurred the flow of funds towards Black entrepreneurs.

According to a Crunchbase report, Black startup founders raised a record $1.8 billion of capital in the first six months of this year. That’s more than 4X the amount of $400 million of funding they landed in the same period in 2020. Again, compare that to the full-year tally of $1 billion and $1.4 billion for 2020 and 2019, respectively. (Inc.)

George Floyd

A key catalyst for the surge in funding to Black startups was the killing of George Floyd, which triggered a wave of sympathy for Blacks and soul-searching at America’s corporates and venture financiers.

“I haven’t seen this amount of interest and conversation in the business community at large about race since the anti-apartheid movement of the ’90s,” said Charley Moore to Crunchbase. His company offers low-cost online legal services to individuals and small businesses and raised $223 million earlier this year.

In June 2020, Softbank Group set up a $100 million fund earmarked for diverse founders, with corporations such as PayPal (NASDAQ: PYPL) and and eBay (NASDAQ: EBAY) also coming forth with commitments for funding Black entrepreneurs.

This trend also encouraged more Blacks to consider setting up new ventures. Another factor – VC firms found they were sitting on dry powder without enough founders; as a result they started scouting for entrepreneurial talent amongst minorities.

Also helping was technology. Funding deals could be struck on Zoom calls or in Clubhouse, a boon for founders on shoestring budgets and unable to travel to the VC’s office.

More needs to be done

Though the rising trend in Black financing is encouraging, it pales into insignificance in the overall scenario.

The total VC funding for startups in the first half was again a record $147 billion; however, Black founders could get only a miniscule 1.2% of it.

And public memory, even of a tragic event such as Floyd’s death, is short.

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