As we strive for a more equitable and inclusive society, it’s no secret that the venture capital industry has a long way to go. A recent article published via CNBC revealed that Black entrepreneurs typically receive less than 2% of all VC dollars each year, while companies led by Black women receive less than 1%. Forbes also revealed that LatinX entrepreneurs weren’t immune to the inequity of VC funding either. In 2022, Latino startups received only 2% of U.S. venture capital investment, a percentage that’s stayed nearly the same since 2017.
To address this issue, Blavity Inc. CEO Morgan DeBaun joined the Olin Brookings Commission, a partnership between the Brookings Institution and Washington University’s Olin Business School, along with a group of entrepreneurs, venture capitalists, and public policy experts. Together, they aim to bridge the VC funding gap for underrepresented groups by providing innovative solutions. Olin Brookings Commission is a partnership between the Brookings Institution supported by The Bellwether Foundation and our CEO’s alma mater.
After analyzing the key issues plaguing the VC industry, the commission presented a report on April 20 with a 3-prong set of recommendations to address the lack of equity in funding. The recommendations include increasing transparency, government support, and public awareness.
The commission committs to creating real change in the industry and aims to place the spotlight on the imbalance of access to capital. The goal is to inspire change among key players within the startup space, including policymakers, investors, and venture capitalists so that the imbalance of funding and the economic inequality that stems from the aforementioned problem is corrected. Since Blavity Inc. is a Black and woman-owned startup that successfully raised VC funding, our leadership understands the challenges faced by entrepreneurs. We recognize that the VC funding gap is a complex issue that requires a multifaceted solution.
By forming a united front, the Olin Brookings Commission represents a potential light at the end of the tunnel. One that in 2020 seemed a lot closer following a notable increase in VCs prioritizing efforts to find opportunities with multicultural-founded companies. However, that fervor has since died down. A 2022 report conducted by Morgan Stanley noted that in 2020, 43% of VCs said it was a top priority for their firm to find opportunities with multicultural-founded companies. By 2022, it had dropped to 32%, which highlights the fact that action is still required.
As our CEO and the commission continue to innovate and drive change in the VC industry, they pave the way for a more equitable and inclusive business landscape. By empowering Black, LatinX, and women entrepreneurs, they build stronger businesses and create a more just and prosperous society for us all.