Read More: McKinsey & Company

In a recent report analyzing the Black-white wealth gap, McKinsey & Company consultants highlight the barriers and interventions to developing community wealth through business ownership and entrepreneurship. The racial wealth gap, exacerbated by the COVID-19 pandemic, is projected to cost the US economy $1 trillion to $1.5 trillion per year by 2028. Statistics around ownership and wealth – only 5% of Black Americans hold business equity (compared to 15% of white Americans); the median white family’s wealth is over 10x the wealth of the median Black family’s – further highlight this gap. 

Barriers to business building for Black entrepreneurs include economic, market, sociocultural, and institutional barriers, which are all linked to racial discrimination in the United States. Economic barriers around access to capital affect scaling and growth; according to the report, Black entrepreneurs are three times as likely as white entrepreneurs to say that a lack of access to capital negatively affects their businesses’ profitability and almost twice as likely to cite the cost of capital.

The article calls for key interventions across public, private, and social sector stakeholders, including implementing policies that produce equitable outcomes, enabling equitable access to capital, building business capabilities, facilitating knowledge sharing, and expanding opportunity for mentorship and sponsorship. RVC is working to increase our offerings of educational and financial resources for BIPOC-owned startups, understanding that the impact of closing the racial wealth gap can restore trust in institutions and strengthen our state and country economically and socially. Looking to contribute? Please contact us to get involved or access resources.

Read Full Report on Pitchbook

In a new report focused female-founded ventures, Pitchbook has identified a concerning downward trend in VC funding for women-led companies. Their data reflects a decline in both deals and capital invested, with firms investing a total of $434 million in Q3—the lowest figure since the second quarter of 2017. Q3 2020 also reflects a 48% drop in funding from Q2, when female founders received $841 million across 132 deals.

Why is this happening? The report brings forth a few hypotheses: venture capitalists’ unwillingness to adopt new processes related to deal flow; additional caretaking and remote-schooling responsibilities that disproportionately burden mothers; economic uncertainty discouraging risk-taking; and the trend toward follow-on vs new investments in the downturn. 

While RVC’s angel investment portfolio has maintained close to 50% investment in companies founded or led by women, the contracting venture capital ecosystem represents an increased need to mobilize female founders and investors. RVC and the Women’s Investor Network are bringing together women founders, funders, and allies for an evening of community-building and angel investing at Reversing the Trend: Funding Female Founders on Thursday, November 19 from 3-6pm MT. 

At this event, investors and community supporters can learn and discuss with industry experts, hear pitches from women seeking capital, network with founders and funders, and start the RVC angel investment process, all in a virtual setting.