In Defense of More Meritocratic VC Funding
"When it comes to who receives VC-backed funding, the numbers speak for themselves. According to Harvard Business Review, Black Americans makeup 13% of the population but only 1% of VC-backed founders are Black, while Latino individuals make up 19% of the U.S but receive less than 2% of funding. Despite comprising 40% of entrepreneurs, only 2% percent of venture capital dollars went toward female-founded companies in 2019, according to a report from the Female Founders Fund.
Beyond the numbers, news stories abound these days in the entrepreneurial space with spectacular failures and fraud. Think Theranos, FTX, Frank, and so many others. In many of these cases, credulous ideas were granted billions of dollars of seed funding without batting an eye. For example WeWork founder, Adam Neumann, whose startup WeWork has lost a staggering $16.2 billion according to The Real Deal, had no issue securing $350 million for his new startup Flow.
Meanwhile, many female founders can tell you the absurdly high bar it takes to simply get a meeting and prove their value to a potential investor. Islindy Merius, a partner at Passbook Ventures who focuses on diverse and immigrant founders, shared: “I couldn’t begin to tell you the amount of times that I have met with diverse female founders who had phenomenal ideas, backed by incredible traction and revenue. Despite so, they’ve struggled to get in front of investors who are throwing money into less capable competitors.”"