The spark for a business idea often comes from the founder’s personal experience or a plan to serve a specific market. That can create unfair odds when the financial gatekeepers don’t have the background to relate.
Technology investments are not distributed in a manner anywhere consistent with the United States’ racial and ethnic composition, and as a result there’s a risk that financial innovations can be missed and new markets overlooked. Across all technology categories in the U.S., the venture funding gap for Black or Latinx-founded startups is staggering. Since 2015, about $15 billion has been raised by Black- or Latinx-founded technology startups, which is 2.4% of the total venture capital raised during that time, according to Crunchbase.
“We are focused on serving the Latinx community, and it has taken a while for the VC community to really understand the customer pain points we are addressing,” said Sam Ulloa, CEO and co-founder of Listo, a San Jose, California-based payment and financial services company that recently received funding from Mendoza Ventures, a Latinx-owned VC. “The stats clearly show that it is more difficult for Black- and Latinx-founded fintechs to obtain VC funding. There are multiple reasons, one of which is simply a lack of access to the right networks; the second is that there aren’t enough Black and Latinx VCs.”
