The Vast Majority of Venture Dollars Go to White Male Founders, Report Finds

Though more women and entrepreneurs of color are leading venture-backed startups across the country, founding teams are still predominantly white, male and located in the Bay Area.

A report from RateMyInvestor and the nonprofit Diversity VC looked at data from 2018 to 2019 — before the killing of George Floyd and others thrust the country into a racial reckoning. Using data from its previous report taken over a four-year period beginning in 2013, it tracked the top 100 U.S. VC firms accounting for $68 billion in funding across 3,304 companies.

Just as the first report found, startups funded by the top VCs were nearly 90% male. Seventy-two percent of founders were white and a little over a third — 35% — were based in Silicon Valley. Almost 14% were Ivy League-educated.

"Women and people of color are starting companies at a record rate and yet, investors are still saying there is a talent pipeline problem," said Shila Nieves Burney, founder and managing partner at Atlanta-based Zane Ventures.

In Los Angeles, female founders are funded at a higher rate than the national average. Nearly 30% of the companies funded in the city have a female founder, compared to 22% nationally. Data also shows that Black founders are more likely to be backed if they are based in L.A.

Funding raised by companies the authors tracked nearly tripled in 2019 from six years earlier. And companies in L.A. raised 7.5% of all seed funding over the time period analyzed. The average amount per deal represented 20% more than the national average.

Despite the bump and considerable attention paid to the issue last year, many figures from that first study have barely budged.

The Bay Area still holds a tight grasp on VC funding, but more investors are turning to companies founded in other cities. An average of 388 funds were launched outside of the Bay Area, New York and L.A. in 2018 and 2019, according to PitchBook data. That number hit just 180 between 2013 and 2017.

The report released Thursday found that over two-thirds of investments were brought in from other cities, 28% of which came outside of major metropolitan areas.