A lack of funding for U.S. startups led by women and people of color is an issue that's been discussed in the investment community for years, and the 2020 protests sparked by the death of George Floyd only heightened the attention on it, DeepWork Capital LLC co-founder and General Managing Partner Kathy Chiu told Orlando Inno.
That's why many investors need to broaden the proverbial "funnel" of potential deals that are considered. 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.
Meanwhile, the national investor community has had to reckon with another issue since 2020: lack of diversity among the investor groups and venture capital firms that control the flow of capital. Deloitte in 2020 found 23% of investment professionals in the venture capital industry were women, 19% were Asian/Pacific Islander, 4% were Hispanic and 3% were Black.
That’s why organizations like BLCK VC, Latinx VC and All Raise have pushed to diversify the investor pool in the last two years, said Maria Salamanca, an Orlando-based partner at San Francisco venture capital fund Unshackled Ventures. “They realize we’re not going to be funding entrepreneurs of color until the investor pool changes. Investors stick to what they know.”
That’s the hope of one local fund. The Lake Nona Sports & Health Tech Fund, launched last year by leAD Sports and Tavistock Group, does not see many investment opportunities for female-founded companies, Principal Thomas Rudy said.
Startup accelerator leAD Sports, which operates in a sports industry that’s often male-dominated, has brought more women onto its team, to the point that the team is roughly half women, Rudy said. “We want to make sure that trickles through into the companies we invest in as well, because we have great experiences on that front. But we can get better with that.”
Historically, there are major discrepancies in U.S. funding for startups led by women and people of color. A 2020 report by RateMyInvestor and Diversity VC analyzed the top deals from 2018-2019 and found 90% of companies were founded by men and 72% had white founders.
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.
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