Crunchbase: Funding for Black Startups Declines

Funding for Black Startups: A Concerning Picture Despite the Rise of AI

Recent data from Crunchbase highlights a troubling reality for Black startup founders in the United States. Despite a slight increase in overall investment in startups, the share of venture capital allocated to companies with Black founders remained desperately low in 2025. In fact, only $942 million, or 0.32% of total venture capital funding, was awarded to these startups. This figure marks one of the lowest proportions observed in recent years, reflecting a decline of more than two-thirds compared to three years prior.

A Glimmer of Hope in 2026

The year 2026 began with a slight resurgence of optimism. As of May 20, American startups with a Black founder or co-founder had raised $643 million. This amount was primarily garnered during the first quarter, which saw the highest volume of funds raised in a single quarter since the second quarter of 2022, when $653 million was raised.

This notable quarterly performance is largely attributed to an exceptional funding round of $350 million in February during a Series E by SambaNova. This California-based company, specializing in artificial intelligence chips, was co-founded in 2017 by renowned technologist Kunle Olukotun. To date, SambaNova has raised a total of $1.5 billion in known funding, with Cambium Capital Partners and Vista Equity Partners leading this round.

Large-Scale Transactions

Interestingly, the $643 million raised so far this year has been achieved through only 34 transactions, indicating a trend towards larger deals. However, despite these successes, the total funding raised by startups with a Black founder remains a tiny fraction of the $252 billion raised by all American startups in 2026.

Reflecting on the Record Year of 2021

The year 2021 was marked by a record funding amount for Black startup founders, reaching $5.2 billion. This peak followed the racial justice movement of 2020. Yet, even at that time, investments in Black founders accounted for only 1.5% of total venture capital funding in the United States.

Henri Pierre-Jacques, managing partner at Harlem Capital, emphasized that the decline in funding for Black entrepreneurs coincides with a notable shift in the political climate. "There is less discussion on the topic because many fear talking about it directly, which is concerning," he told Crunchbase News via email.

Exceptions in Venture Capital

Pierre-Jacques believes that venture capital relies on seeking exceptions. "This won't change for any group," he stated. "I focus on what we can do as a firm and then advocate for underrepresented founders."

Notable Funding Rounds

As in 2025, a significant portion of the funding for Black-founded startups in 2026 comes from a few major funding rounds. Among the notable examples is SambaNova, which continues to stand out in the AI and machine learning space. Intel has also increased its stake in SambaNova to 8.2% following its investment in the Series E round.

Novig, a New York-based sports prediction market, raised $75 million in a Series B round in February, led by Pantera Capital, with a post-money valuation of $500 million. This platform allows users to bet peer-to-peer on sports events.

Harper, based in San Francisco and developing an AI-native insurance brokerage for SMEs, also raised $47 million in a Series A round led by Emergence Capital. Harper is an alumnus of the prestigious startup accelerator Y Combinator.

The live events platform Posh raised $37 million in a Series B round led by FirstMark in March.

GovDash, which offers AI-driven government contract software, raised $30 million in a Series B round in January, co-led by BCI and Mucker Capital.

The Importance of Relationships and Networking

Investors and founders interviewed by Crunchbase News emphasized that in the current AI-focused funding landscape, relationships and networking have become even more crucial for startup founders, particularly for Black entrepreneurs and other historically overlooked groups.

"In an era of AI, who you know matters more than ever," said Pierre-Jacques. "There are fewer deals being done by companies and partners. You need to build personal relationships to reach the top. It's not just about comparing KPIs."

Joah Spearman, a two-time startup founder, is currently raising funds for his fintech startup, TenYour. He shares Pierre-Jacques's view on the importance for Black founders to expand their networks as much as possible.

Spearman urged young founders or Black founders who are building and raising funds for the first time to gather as much information and knowledge as possible from other founders.

"This can save headaches, time, and limited resources, especially during the early stages," he said. "Black people in America have defined, and continue to shape, what it means to be in community, and I am grateful to play a small role in this ecosystem."

Having worked at Bazaarvoice, a software analytics company in Austin, Spearman stated that he built a network over time that included exited founders, whom he could call upon as "investor-advisors."

"These advisors can write checks, make introductions, and think like operators, which is sometimes better than seeking advice from VCs who haven't been operators during the zero to one phases," he said. He also recommends that new founders, especially those in targeted sectors like fintech or insurance, consider attending industry-specific conferences like Money 20/20 or ITC to establish connections with VCs "months and sometimes years before they are ready to raise funds."

Spearman also noted that Black founders should be open to funding sources other than traditional venture capital, especially in the early stages. Many are directed towards accelerators in their early days, he pointed out.

"I don't think that's bad advice," he told Crunchbase News via email, "especially if it involves an accelerator like the one Northwestern Mutual offers each year." TenYour participated in this accelerator in 2025, which led to both investment and industry connections, he said.

Towards a Promising Future

The startup funding landscape has radically changed in just five years. In 2021, following the COVID pandemic, a tense presidential election in 2020, and the highly publicized murders of Black Americans, including George Floyd, Breonna Taylor, and Ahmaud Arbery, many startup investors made highly publicized promises to support more Black founders and other underrepresented founders.

Today, "we are so far from 2020, not only in terms of the promises made but also in the social and venture capital landscape," said Spearman.

Yet, "rather than looking back," he said, "I would recommend that we collectively continue to move forward to envision and co-create the world we want. For founders, this often starts with their projects and the choice to solve a significant problem that other founders (and investors) might overlook."

A Call to Action for Venture Capital

Tanvi Lal, co-founder of VC Unleashed and investor at Intuit Ventures, is frustrated that funding for Black-founded startups compared to overall venture capital investment has decreased in recent years. This is particularly discouraging, she said, given research indicating that Black Americans are more active consumers of AI tools than the general population, with 53% using these tools daily or weekly, compared to 39% of the overall population.

"For me, this shows early signals that the investment cycle creating wealth from AI is not returning to the communities using AI the most," she stated.

In 2021, Lal and Michelle Dhansinghani founded VC Unleashed, a nonprofit organization, to increase access to the venture capital world for budding founders and investors. Although the organization is open to all, Lal stated that Unleashed uses its platform "to support underrepresented founders as much as we can to help them access capital and build their networks," including through its upcoming Shift VC conference.

When asked if she could change one structural aspect of how venture capital operates to improve outcomes for Black founders, Lal said it would involve shifting the conversation upstream from the general partners (GPs) of venture capital firms to the limited partners (LPs) of those firms.

"GPs deploy the capital that LPs give them, and if a pension fund or endowment does not ask its venture capital managers for information on the demographics of the founder portfolio with the same rigor it applies to sector concentration or stage exposure, that absence trickles down to the founder level," she wrote via email. "Questions about founder demographics, asked consistently and at scale, would do more to change behaviors than anything else."