Historically, venture capital (VC) has failed to support underrepresented founders. In 2020, only 2.6% of VC dollars were invested in minority founders. It’s clear that traditional VC is failing to support diversity in startups. So how does online startup investing stack up?
This Chart of the Week looks at how much funding minority founders received from everyday investors in 2021.
In 2021, $456.5 million was invested in startups through the online private markets. Of that total, nearly $144 million went to minority founders. For 2021, minority founders received 32.4% of all dollars invested through online equity crowdfunding. These figures prove that the biases held by traditional VC investors has not carried over into online startup investing. Everyday investors are supporting minority founders at far higher rates than VCs.
While there is still significant room for progress, Regulation Crowdfunding is already proving to be more inclusive than VC – both for investors and founders. These trends are likely to continue in 2022 as more investors engage with online startup investing and more minority-founded companies seek inclusive funding opportunities through the online private markets.
Note: all data used for the Chart of the Week comes from the KingsCrowd database and represents a snapshot of the crowdfunding market.
