White men’s dominance in the tech industry has been firmly established. So it shouldn’t be much of a surprise their socioeconomic polar opposite — black women — are practically nonexistent in the industry. But a new report shows that much of the reason companies like Twitter have virtually no black women is due to a lack of funding.
According to Digital Undivided’s report “The Real Unicorns of Tech,” venture capital (VC) firms lend white men $1.3 million on average even if their startup fails, compared to $36,000 for black women. In the past five years, black women received a negligible amount of venture capital funding — just .002 percent — while the number of black women starting their own businesses has more than tripled in the last decade.
Research has shown that women venture capitalists are more likely to fund startups that are led by women. But women are seldom partners in VC firms, less than 10 percent hold the position and about 8 percent of firms’ funding goes to women entrepreneurs as a result. That number plummets when factoring in ethnicity: African-American men overwhelmingly receive the mere 2 percent of VC funding startups get, while black women get a tiny fraction of that.
VC firms have their own diversity issues that closely mirror those in the tech industry. But firms lag far behind their tech counterparts in responding to calls for more diversity. Last year, the National Venture Capital Association pledged to increase its diversity efforts. One firm, Kleiner, Perkins, Caufield & Byers, has begun moving to bridge the gender gap after the former employer of ex-Reddit interim CEO Ellen Pao hired Arielle Zuckerberg, the Facebook founder’s sister, to lead the firm’s startup funding.
Additionally, 500 startups recently hired Monique Woodard, the firm’s first African-American woman partner, to lead the funding for black and Latino startups. Hopefully, other VCs will follow suit and help infuse black women-led startups with the same millions of dollars white men traditionally get.