After George Floyd's murder, investments in Black entrepreneurs surged. But they didn't last

"In 2020, the murder of George Floyd and the growing Black Lives Matter movement put a spotlight on diversity and equity issues-including in the business world. Suddenly investors were clamoring to support Black entrepreneurs, a way of course correcting a history of underinvestment and unfair barriers. In the year after Floyd's murder, a given investor was 36% more likely to invest in a Black-founded startup, and the overall share of venture capital dollars going to Black entrepreneurs grew by 43%."

"For this new study, Cornell researchers analyzed data from PitchBook, which shows venture capital funding into companies. They used software (and then manually checked it) to classify images of about 150,000 founders by race, and then looked at investments from 2020 to 2023. The researchers also looked at who was driving the temporary surge in investments, digging into about 30,000 investors."

Investment in Black-founded startups rose sharply immediately after George Floyd's murder, with a 36% higher likelihood a given investor would invest and a 43% rise in venture capital dollars to Black entrepreneurs. Major funds were created to back founders of color, but the surge faded within two years and funding returned to previous levels. Cornell researchers analyzed PitchBook data, classifying images of roughly 150,000 founders by race and examining investments from 2020–2023. The temporary increase was driven mainly by venture capitalists who had never before backed Black entrepreneurs, and stronger Black founders tended to avoid investments from those newcomer investors.

Read at Fast Company