Where are all the Black people in venture capital?

This Black History Month has been one of celebratory firsts, including Erin Jackson’s historic win as the first Black woman to get gold in speed skating at the Winter Olympics. And, if you watched last Sunday’s Super Bowl, it was the first time that hip-hop—the genre created by Blacks and Latinos over 20 years ago—took center stage at the halftime show. Dr. Dre, 50 Cent, Kendrick Lamar, Mary J. Blige, and Snoop Dogg (now the most coveted neighbor in the metaverse)—industry and cultural icons who’ve been revered and celebrated by hip-hop lovers and communities of color were finally getting a different kind of validation, a different kind of visibility. 

And while New York Times’ Jon Caramanica asks if such visibility, especially given by the NFL, is 20 years too late, I say better late than never.

The unfortunate reality for underrepresented communities is that there’s never enough visibility. And while there will always be promises made by corporations and industry leaders to meet the public demand to see diversity throughout their ranks, there aren’t many guarantees. Sometimes, they’re straight up empty promises.

Venture capital is a prime example of this, in which 1.3% of U.S. venture capital money went to Black-founded businesses in 2021, as my dear colleague Jessica Mathews explores in today’s Term Sheet newsletter. In her Q+A with Georgetown University adjunct professor and Black venture capitalist Melissa Bradley, she seeks to answer the question: Where are all the Black people in VC? Bradley’s answer in a nutshell: We’re here, but it’s complicated.

When asked about the disparities in funding between white and Black founders, Bradley, who’s done her share of research on the matter as a professor and as an appointee of the Clinton and Obama administrations, says it’s the historic lack of social capital, in part, keeping Black founders from getting the actual capital. “Until recently—really until the death of George Floyd—the predominant archetype of a venture capital investor was an older, white man who would come out of corporate America and/or founded their own business,” says Bradley. “The nature of venture capital—it is totally driven by perception of profitability and social capital.”

Bradley notes, however, that the lack of funding isn’t stopping the success of Black businesses. According to her research, while 50% of businesses fail before five years, the average lifespan of a Black business is 8.7 years. On the flip side, those Black businesses are lasting longer in only a handful of industries. “It’s important to note that less than 20% of all Black entrepreneurs are in the tech space,” says Bradley. “And so oftentimes, when we do start our businesses, we’re starting businesses that we know: We’re starting beauty businesses, we’re starting health businesses, we’re starting food businesses, and oftentimes we’re starting businesses in the community that we know, which is a Black community.”

There is a silver lining though. Bradley emphasizes that despite the inequities that limit access to capital for Black founders, there are new opportunities being paved. Bradley is doing her part as the managing partner at 1863 Ventures, an accelerator and venture capital firm focused on underrepresented founders. And she’s not alone—Arian Simone and her partner Ayana Parsons are doing the same with their venture capital firm the Fearless Fund, geared at investing in early-stage startups run by women of color.

You can read Jessica’s interview with Melissa Bradley in full here (Trust me, you’ll want to). And if you want to read more of Jessica’s reporting about the latest trends and developments in the deal making world, then subscribe to Term Sheet to get her in your inbox every morning.

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Ashley Sylla
ashley.sylla@fortune.com

This edition of raceAhead was edited by Wandy Felicita Ortiz.

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