The funding gap between Black women founders and their white counterparts in the tech industry is staggering. According to a project Diane Report from 2016, out of the 10,238 venture deals minted between 2012 and 2014 only 24 of them had Black women founders. This equates to about 0.2 percent of the overall investment. The report also found that “fewer than a dozen Black women had raised more than $1 million in venture capital”. Between 2009 and 2017, only 0.0006% of VC funding went to businesses started by Black women, according to nonprofit advocacy group Digitalundivided
There are several reasons for this level of disparity including the lack of proper exposure and resources as well as blatant discrimination. Many organizations, such as Fundr, have taken it upon themselves to rectify this issue. Fundr was co-founded in 2019 by trailblazing entrepreneur Lauren Washington. The platform revolutionizes seed investments by automating the research process which, in turn, removes biases: “We all of unconscious bias, but when you put data to remove that unconscious bias you’re able tomake decisions that shift your thinking”.
In an exclusive interview with TANTV’s CEO, Adedayo Fashanu, Lauren Washington discussed some of the struggles Black female founders face and the ways in which Fundr fosters innovation, diversity, and equity within the tech industry.
Q: Can you tell us a little about your background and how you got into the business of supporting Black women in tech and Black founders?
A: “It’s a little bit of a windy road in terms of how I got to where I’m at. When I graduated from undergrad I went into marketing. I worked at Instyle and TV Guide and helped with their social media and online marketing and the very early advent of those types of marketing channels. I then went back to get my MBA at Northwestern Kellogg School of Management and when I came out of that I went into the agency side. So during that time, I worked with probably over 100 different companies working on their brand strategies and particularly using data to pull out insights from social media. After that, I decided to start my first company called KeepUp, and we won the 43 North competition in Buffalo New York and that just sort of kicked off my time here in the tech space.”
“I was brand new, I had no idea how to navigate this industry. It was completely different than being on the corporate side, in terms of language, in terms of process, in terms of norms. I really struggled particularly with the fundraising piece in terms of how to bring money into my company after winning this really big pitch competition. What I found is that, a couple of years later, I was not the only one who was struggling with this. I met other Black women in the industry and we started talking and sharing very similar stories… When the Project Diane report came out I started to build this whole arm around how we get education and funding and access to these women. After that, I realized I think there is a larger systemic issue here that needs to be addressed, which is why I started Fundr.”
The Funding Gap
In the past few years, the number of investments targeted directly towards Black women-founded tech companies has increased from 0.2 percent to 1 percent, however, there is still much work to be done.
Q: What systemic issues and challenges do Black women face in fundraising?
A: “I will say having been in this industry for the last ten years the challenges are pretty much the same. The funding gap has barely budged over the last 10 years. I think there are about 100 recorded women who have brought in over one million dollars but when you think about that that’s really only 10 women every single year…When the 2020 social justice movement happened there were a to of commitments that went around that. I think there was some excitement in the industry that we could start making some headway. Still, when we look at the data this year we found that only one percent of all those billions of dollars in commitments have actually been deployed and it’s just sitting there and no one is doing anything with it. Correlating with that we have also seen the numbers that had peaked around 2020-2021 for funding going to Black women drop back to exactly where they were. Funding went down about 50 percent for Black founders and it’s below where it was in 2020, and I think it becomes really difficult to fight this type of issue when you’re not seeing really any progress.
Fundamentals of Fundr
Q: What exactly is Fundr and what is aiming to achieve in the fundraising ecosystem?
A: “Fundr is aimed directly at funding. A lot of these commitments that came out years ago, of the money that has been deployed, most of it has gone to programming and education for founders. Its mentorship programs, its accelerators that don’t come with money, and you can be over-mentored. At some point, I can learn everything I can but if the system is working against me it doesn’t matter.”
“What Fundr is doing is really trying to provide those who are making the funding decisions with the data that they need in terms of optimizing their overall process so that they can remove bias. If they have this data and they understand, looking at their pipeline, how many Black women have gone through their pipeline, how many invested in and how many have they said no to. Then those that they have said no to are they similar to the other companies that you said yes to, and is the only reason you said no because of their race and gender? That opens up a lot of change and questions, like where within this pipeline are they getting stuck? Is it at the initial introduction, is it at the pitch stage, is it at the negotiation stage? Once you understand those things you can make those changes.”
“Through our platform, we have been able to identify top companies while still removing bias. The reason why we can do that is because we have really dug deep into the research around what makes a great company. If you’ve been an investor for a really long time you’re already doing these calculations in your head. You’re already thinking what’s the traction, what’s the revenue, what’s the team look like? But you’re also doing that with this angle in terms of does this match in terms of pattern matching to stuff I’ve seen that is successful? Often times when it comes to the founder what you’ve seen is white men being successful in this industry. That’s just who’s getting most of the money, and what we are doing is removing that piece and saying let’s get down to fundamentals and determine if this business is going to be viable long term.”
Advice and Hope for Black Women Founders
Fighting an issue that has systematic barriers can be difficult, discouraging, and exhausting. Especially when the issue is associated with one’s gender and race. However, there is hope at the end of the tunnel.
Q: What are you hopeful for and what advice do you have for Black women founders?
A: “Firstly know that you are not alone. Community and shared experience are important, so if you haven’t talked to somebody else who is a Black Founder or who has fundraised go find them. You’ll see that you’re not alone, it’s not just you, you’re not a bad founder, you don’t have a terrible company. There are larger things that are at play here.”
“I think doing a little work in your area around how you can get involved and get connected is really important. It was really exciting to see how many conferences there are now, and how many groups there are that are really focusing on this. I think there is probably a conference in every city once a week that is doing something around Black tech. If it’s not a large conference then it’s small groups that are getting together. Here in Austin where I live, I do a Black Founders Happy Hour that I’ve been doing for two years and there are little movements like that all over that really allow you to find your community.”
“I wouldn’t be doing this work if I didn’t think there was potential for change. I talk to so many investors who recognize that this is an issue, not just Black investors but white investors as well. They want to make these changes but changes like this, I mean if you’re changing an industry, if you’re changing a system, this isn’t even systemic just within the industry, it’s nationwide. I mean we were built on slavery and we are built on racism, these are not things that are going to change in a couple of years or even a decade. Making sure that you are really honing in on the little wins that you’re making and the little bit of progress because it’s going to be a marathon, is super important. I get up every day and think, okay I’ve made a little bit of progress here.”