Minority and female startup founders typically see disproportionately low amounts of funding, but they’re present among Orlando’s top investment deals of the year.
The first five months of this year brought at least $816 million in investment capital to metro Orlando startups. Startup funding in the U.S. traditionally has been concentrated among tech companies with white, male founders, but minority and female-led companies are well represented among the region’s biggest fundraising deals this year.
In fact, four out of the nine funding deals valued at more than $10 million were closed by metro Orlando companies that fall into that category. That’s a sizable chunk considering, companies with at least one female founder nationwide raised only 15.6% of capital in the first quarter while Black and Latino founders historically only land 2.4% of capital, according to PitchBook, the National Venture Capital Association and Crunchbase.
Perhaps the most notable deal was Orlando-based Stax’s $245 million funding deal announced in March. That made the 8-year-old fintech company a unicorn, a private company worth $1 billion or more.
Stax is led by siblings and co-founders CEO Suneera Madhani and President Sal Rehmetullah, children of Pakistani immigrants to the U.S. The company’s fundraising success over the years is even more impressive given the stats, Madhani told Orlando Inno at the time of the funding round. “We’ve never had a seat at the table. It’s incredible we’ve been able to find our way here.”
Discussions among investors in the region and across the country regarding how to provide more equitable access to startup funding came about after the murder of George Floyd by former Minneapolis police officer Derek Chauvin in 2020 sparked protests nationwide.
While there has been plenty of dialogue on the topic, Madhani said that’s not enough. “What are the actual actions? Who are we holding accountable? We need more to hold venture funds and businesses accountable for who they’re doing business with.”
Annual data on dollars invested in metro Orlando startups led by minorities and women is not publicly available, but there are signs there’s been a disparity in the last couple of years. For example, only four of the 25 best-funded private companies in metro Orlando have minority or women founders, according to Crunchbase data.
Meanwhile, women-founded startups in Orlando raised a negligible amount of venture capital in 2020 compared to Tampa, Miami and markets outside Florida such as Nashville, Tennessee; Denver and Minneapolis, according to a report from Tampa-based Embarc Collective.
Floyd’s murder was a motivating factor for many in Chicago to boost seed funding for Black and Latino founders, Stella Ashaolu, the CEO of Chicago startup Wesolv and the co-founder of Fifth Star Funds, said in a report by sister publication Chicago Inno. "The death of George Floyd really ignited a lot of attention towards the inequities in a number of spaces. Here in Chicago, we really saw that in technology."
Chicago nonprofit P33 this year found Chicago to be the U.S. city with the biggest percentage of angel and seed funding for Black and Latino founders in 2021. P33 named the top 10 cities, but Orlando did not make the list.
Fifth Star writes checks between $25,000-$50,000 to startups led by Black founders. It invests at the earliest stages, typically in the "friends and family" round, and ultimately plans to deploy $5 million to Chicago's Black founders. Instead of operating like a traditional VC fund, Fifth Star funds startups via a philanthropic model where all the money it makes after a startup exits is put back into the fund to invest in more startups.
Chicago Inno Senior Editor Jim Dalke contributed to this report.
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