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- Seed stage. In her two years working as head of platform for BBG Ventures, an early-stage venture fund that invests in diverse founders, and working for startups before that, Amber Quiñones long suspected something: that much of the funding the venture industry puts behind diverse founders goes to white women.
Over the past several months, Quiñones dug into the data to explore her hypothesis. And the results didn't surprise her, although they might surprise others in the industry. White women have received 79% of seed-stage funding categorized as deployed to diverse founders, according to an analysis of Crunchbase data. Quiñones and BBG Ventures shared the report, part of a broader analysis of the state of seed-stage venture funding, with Fortune exclusively.
Crunchbase's database includes an all-time $3.17 billion in seed-stage funding for diverse founders—women and people of color—through June of this year. The database records 32,000 early-stage deals for diverse founders by active investors (not friends-and-family seed-stage backers), but the majority of those deals don't disclose the amount of capital raised. Out of those deals, about 24,000 were for companies founded by women—and 20,000 of those were startups founded by white women.
All in all, white women received 64% of diversity investment deals by deal count and 79% by amount of capital, the analysis found. Women of color received less than 10% of diversity investment checks by deal count. The data supports longtime research that shows that Black women receive less than 1% of venture funding—and arrives as Fearless Fund is under legal attack for providing capital to Black women founders.
This research analyzed seed-stage investing because of BBG Ventures' focus as a firm. Early-stage investing arguably produces more progress for female founders than growth-stage investing. With the latter, mega rounds for companies founded by mostly white men have shrunk the share of capital that goes to women in recent years, even as female-founded companies raise increased dollar amounts year-over-year.
Quiñones argues that the seed stage is a critical place to improve these statistics. "We can't meaningfully change the outcomes of venture capital at the exits if we're not meaningfully changing the inputs at the early stage," she says.
BBG Ventures is led by managing partners Susan Lyne and Nisha Dua, and all companies it backs have at least one female founder. In its own current fund portfolio, 55% of its female founders are women of color and 45% are white women.
Ultimately, these findings lead Quiñones to worry that some of the same patterns Silicon Valley has been through with male founders are repeating in the female founder space. Are investors looking to diversify their portfolios overwhelmingly backing "Stanford-educated" white women rather than a truly diverse group of founders?
"Yes, we are able to move women forward," Quiñones says. "But is everybody moving forward with them? Not necessarily."
Emma Hinchliffe
emma.hinchliffe@fortune.com
@_emmahinchliffe
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