‘4 percent of all VC goes to Black and Latino founders, even though they represent 32 percent of the US population’ – Dr. Paul Judge

Not only are Black and Latino founders getting access to fewer funding rounds in the US, but those rounds, when they do happen, are 30 percent smaller. That’s according to Dr. Paul Judge, chairman and managing partner at the Open Opportunity Fund.

Speaking at Collision in Toronto today, Paul (pictured above) outlined that there is an annual US$400 billion gap between the funding that Black and Latino founders currently receive, and what they would receive proportionately based on their representative population, if they had funding parity with their white counterparts.

“On average, it’s been about 300 Black and 300 Latino companies founded a year over the last five years in tech [in the US]. But even when they raise funding, they’ve raised, on average, about US$7.8 million, where their White counterparts raised on average US$11 million,” added the chairman.

“Not only are there fewer funding rounds – they’re 30 percent smaller when they happen.”

Alarmingly, Paul said that, for the first time since 2016, funding for black-founded businesses dropped below US$1 billion. 

Change can only happen, says Paul, with the distribution of funds based on merit: “What needs to happen over the next 5-10 years is close that gap. And I think what that looks like is US$20-to-$40 billion a year going to where talent is, and being more distributed based on merit”.

“I think the result of that is going to be stronger returns. And to me, that’s how we really get long, lasting change.”

Paul went on to share an anecdote about the importance of paying attention to minority-driven funds, adding that “we need to be more vocal about the success stories.”

“I was at a dinner a couple weeks ago, and a gentleman shares [with me that] he’s invested in 60 funds. He’s looked at the data [and found] that minority driven funds have outperformed non-minority driven. Why isn’t that a headline? Why isn’t that a case study?”

Paul went on to say that there are so many examples like that, that it underscores the need for more organizations like the Open Opportunity Fund: “True success, to me, is when the rest of the industry realizes they were missing alpha, they were missing returns, and the rest of the industry starts to do the same, and they realize it was not just the right thing to do, but it was also the profitable thing to do.”

“And so that’s what success will look like over the next five to 10 years.”

Collision overview:

More than 1,600 startups are taking part in Collision 2024 – the highest number of startups ever at a Collision event. 45 percent of these are women-founded, and startups have travelled to Toronto from countries including Nigeria, the Republic of Korea, Uruguay, Japan, Italy, Ghana, Pakistan and beyond.

In total, more than 37,800 attendees have gathered at the event, as well as 570 speakers and 1,003 members of the media, to explore business opportunities with an international audience.

739 investors are attending Collision, including Vinod Khosla, founder of Khosla Ventures; Wesley Chan, co-founder and managing partner of FPV Ventures; and Nigel Morris, co-founder and managing partner of QED Investors, as well as nine companies on the Forbes Midas List, and 12 investors from those firms.

Top speakers at Collision include:

• Geoffrey Hinton, Godfather of AI
  Maria Sharapova, entrepreneur and tennis legend
• Aidan Gomez, founder and CEO of Cohere (an AI for enterprise and large language model company, which raised US$450 million at a US$5 billion valuation in June 2024)
• Raquel Urtasun, founder and CEO of Waabi (a Canadian autonomous trucking company)
• Jeff Shiner, CEO of 1Password (a cloud-based password management tool)
• Dali Rajic, president and COO of Wiz (a cloud security platform)
• Alex Israel, co-founder and CEO of Metropolis (an AI and computer vision platform)
• Jonathan Ross, founder and CEO of Groq (an AI chip startup)
• Keily Blair, CEO of OnlyFans
• Autumn Peltier, Indigenous rights activist

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Useful links

• Collision website: https://collisionconf.com/ 
• Collision media kit: https://collisionconf.com/media/media-kit  
• Collision images: https://flickr.com/photos/collisionconf 
• About Web Summit: about.websummit.com