Why black female CEOs run 50% of our portfolio companies – TechCrunch

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One thing is certain as 2022 kicks off – there are billions of dollars of opportunities ripe for investment that include women leaders.

Astia alone considered $3.024 billion in 2021 representing 1,103 companies, a 119% increase over the previous year, ending any whispers of pipeline issues. However, the dismal data regarding venture capital aimed at underrepresented founders, especially black female founders, remains the same.

While only 2.3% of female-led startups received venture capital funding in 2020, that figure drops to just 0.64% for Black and Latina women. Such disparities in venture capital fundamentally exclude women of color from the impact of entrepreneurship on wealth, job creation and innovation – and continue to perpetuate systemic biases.

Three years ago, we decided to change that. We realized that businesses led by black women were abundant in our pipeline and failure to invest was the only failure to be found.

Adventure opportunities are all about finding hidden gems. Best-in-class companies look for underinvested, high-performing companies that have the potential to change the world. In our efforts to find these hidden gems – and assuming we had done so years ago – we found an entire class of them among us.

Although we were deeply disappointed to hear this but for the breed we probably would have invested in a number of businesses we didn’t do we were excited for the opportunity to correct something we were on had full control and agency – our own investment decision.

This led to our efforts to dig deeper into our own data and identify specific actions that could be corrected with respect to the intersection of gender and race in our investment activities. Three years later, we have implemented solutions for the critical findings revealed by the Astia Edge investment pilot, and the results speak for themselves.

As a direct result of this self-review and course correction, the Astia Fund portfolio today is 50% black female CEOs and 17% of the capital of the Astia Angels deployed after the correction has been invested in companies with black female CEOs.

The journey to get here was not without many sobering moments of reflection.

The findings detailed in our new report provide revealing insight into some of the critical elements missing from the current venture capital model when it comes to racial equity. In a nutshell, deals with pilot companies took 245 days to complete, compared to just 161 days in Astia’s broader female-led portfolio, and deals required more than 60 outside introductions by Astia to attract syndicate investments (compared to less than five for others in Astia’s portfolio). portfolio), as well as over 100 hours of hands-on work on behalf of the Astia team serving as advocates to directly counter investor bias.

The softer data was equally discouraging. Throughout the pilot, Astia found that companies led by black founders disproportionately came to Astia with less invested capital during seed and “friends and family” rounds, despite having often accomplished much more with their limited funding. Much of this funding gap can safely be attributed to systemic pressures caused by the wealth gap in the United States. Adding insult to injury, investors often assessed these entrepreneurs on “who else had invested” – a question rooted in a bias against those without access and without networks to wealth – versus a appreciation of their progress, courage and potential.

The fact is, as an investment community, we need to take responsibility for the racial disparity in funding and take proactive steps to rethink the model and the status quo. Data shows that 17% of black women are starting or running a new business, compared to just 10% of white women and 15% of white men. It’s not a pipeline problem. Black female founders exist in large numbers – we just need to find them, value them fairly, and invest in them.

We have witnessed firsthand the discomfort of this realization, but now we recognize the power to break the cycle. We ask every venture capital firm to do the same. It’s a new year and it’s time for a new VC – one that benefits everyone, not just the few.

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