The proportion of funding going to metro Orlando startups with minority or female founders has increased in the last two years, data shows.
Orlando Inno analyzed all investment deals in metro Orlando startups valued at $1 million or more from 2020-2022, based on data tracked by PitchBook and the National Venture Capital Association. Companies with at least one founder who is a woman landed 19% of those investment dollars in 2021, up from 5% in 2020. Similarly, the proportion of investment dollars that went to firms with at least one non-white founder grew to 32.7% in 2021, up from 12.9% in 2020.
That growth is important since women and people of color historically land disproportionately less capital than other startups. A 2020 report by RateMyInvestor and Diversity VC analyzed the top deals from 2018-2019 and found 90% of companies receiving capital were founded by men and 72% had white founders.
There is not yet enough data from PitchBook and the National Venture Capital Association for 2022 to do a similar analysis.
Still, metro Orlando’s blockbuster year for startup investment in the first five months of 2022 has included many companies led by people of color and women. In fact, the region's nine deals worth $10 million or more this year add up to $806.5 million in investment. The majority, $528.5 million, went to companies with a minority and/or female founder.
There have been two high-profile examples of diverse founders finding success in Orlando in the past year, DeepWork Capital LLC co-founder and General Managing Partner Kathy Chiu told Orlando Inno.
One is fintech company Stax, a portfolio company of DeepWork that earlier this year secured $245 million in new funding to become a tech unicorn worth $1 billion. Stax is led by siblings and co-founders CEO Suneera Madhani and President Sal Rehmetullah, children of Pakistani immigrants to the U.S.
The other is Home Lending Pal, a mortgage shopping platform that aims to cut down on lender discrimination. The company has raised the majority of its $3.5 million-plus in funding since January 2021, and DeepWork invested in the firm in a bridge round announced in April.
These success examples signal to the investment community that investing in a more diverse group of founders not only is important ethically, Chiu said. "They also are examples of why these deals are good for business."
Of course, funding for metro Orlando companies is far from totally equitable.
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 and Miami, according to a report from Tampa-based Embarc Collective.
That's why many investors need to broaden the proverbial "funnel" of potential deals that are considered, Chiu previously said. For Orlando-based DeepWork, that means looking for companies in new places. Every potential deal needs to meet the same rigorous criteria to land a check from DeepWork, she said.
Still, DeepWork can take steps to consider a broader range of companies. That includes going to a wide array of pitch competitions, checking in with different angel investment groups and tapping into its own network of people in the startup community. Specifically, consulting a more diverse group of executives and leaders in the startup ecosystem means investors are more likely to be introduced to a diverse crowd of people to potentially invest in, Chiu said.
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