August 22, 2022

Examining & Positioning the Path Forward for Black, Hispanic or Latino & Women Founded Companies in Chicago


World Business Chicago
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Chicago, IL 60601

Media Contact:
Andrew Hayes

Examining & Positioning the Path Forward for Black, Hispanic or Latino & Women Founded Companies in Chicago

(CHICAGO) – August 22, 2022 – Today, World Business Chicago, the city’s public-private economic development agency, in partnership with Chicago:Blend and Fifth Star Funds, published an original report detailing the status of startups founded by underrepresented (Black, Hispanic or Latino, and women) founders; as well, the strengths, weaknesses and opportunities for Chicago-based startups ready for funding and growth.

Publication link: Chicago Business Bulletin, Issue #5: Black, Latino & Women Founded Startups in Chicago, August 22, 2022

“This report is intended to raise awareness of the strategic movement underway in Chicago to drive greater, more equitable investment by and among VCs and our city’s incredibly innovative diverse founders,” said Michael Fassnacht, President & CEO, World Business Chicago, Chief Marketing Officer, City of Chicago. “While we have seen some progress over the last couple of years, we still have a long way to go. We especially thank Chicago:Blend and Fifth Star Funds for leading the way generally, and partnering with us on the release of this report.”

The World Business Chicago Research Center developed a methodology to analyze deal data for underrepresented founders, using Crunchbase and Pitchbook™ data to explore the performance and range of funding deployed to underrepresented founders. This report establishes a baseline for Black, Hispanic or Latino, and women founded companies, and highlights that better data collection for other marginalized populations (e.g., LGBTQ+, veteran, disabled, and other ethnic or racial groups) remains an opportunity for improvement.

In sum, underrepresented founders historically account for a smaller slice of venture capital (VC) and private equity throughout the United States. In Chicago, only 10.2 percent of all deployed VC funding since 2019 has gone to Black, Hispanic or Latino, or women founded companies. 

However, Chicago leads other major startup ecosystems in the share of venture capital funding garnered by underrepresented founders. Leading the report is the fact that underrepresented founders saw a 159 percent increase in VC raised between 2019 ($232M) and 2021 ($601M); and, to date in 2022, $575 million has been raised. According to World Business Chicago, this suggests a trend, or movement, afoot among Chicago investors who are increasingly participating in deals with underrepresented founders. Among the report’s highlights include: 

  1. Compared to other top startup ecosystems, Chicago has a higher share of startups participating in venture capital deals with a Black or Latino founder. 
    1. Since 2019, 5.1% of companies participating in a venture capital deal had a Black or Latino founder, compared to 2.5% nationally. 
    2. Since 2019, startups with a Hispanic or Latino founder have captured 3.1% of venture capital, more than that which was seen in the Bay Area or New York, falling only behind Miami.
    3. Since 2019, Black founded companies raised 1.5% of venture capital, although 3.1% of companies participating in a venture capital deal had a Black founder. Chicago has more Black-founded companies participating in venture capital deals than in New York or the Bay Area, falling only behind Atlanta.
  2. Chicago’s Black-founded startups now have a larger median deal size than all companies raising venture capital. For example, in 2022, the median venture capital deal size for Black founded startups was $4.3M, compared to $1.6M for all deals in Chicago.
  3. Performance by Latino startups in Chicago is driven by larger, later stage deals. Consider, in Q1 and Q2 of 2022, six Latino- founded startups raised over $290M in venture capital, or 11.8% of all venture capital raised this year. This over-performance is driven by two specific deals: a $200M Series D round closed by Loadsmart, and an $82M Series D round closed by Kin Insurance.
  4. Women-founded startups are still raising less venture capital than non-women founded startups.
    1. Despite only raising 5.7% of total venture capital since 2019, 23% of all startups participating in deals had a woman founder. 
    2. The median venture capital deal size for women-founded companies in 2022 was $0.98M, compared to $1.55M for all companies.

“We commend the World Business Chicago team for their leadership in publishing this report, which provides a comprehensive, data-driven framework for understanding the magnitude of funding disparities among BIPOC and women founders,” said Joey Mak, Executive Directo, Chicago:Blend. “The report also reinforces what many of us have observed anecdotally–that some progress has been made, but there is much work left to do to build a more equitable tech and startup ecosystem for our city.” 

Investors in Chicago are increasingly participating in venture capital deals with Black, Hispanic or Latino, or women founders; with nearly one-third doing so year to date in 2022. Entrepreneurs from these underrepresented groups are also launching their own funds that have equity-focused investment theses. 

We sought to dive into the data on Black, Hispanic or Latino, and women founders in Chicago in order to set a baseline by which we will track and report growth, as a way to support the broader effort to drive equitable and inclusive economic development in our city,” said Hannah Loftus, Research Director, World Business Chicago. “Working alongside our Venture & Innovation team, we hope to make it easier than ever to connect startups with investors with a track record of investing in diverse companies, and begin to close the funding gap.”

Chicago is a leader in funding captured by underrepresented founders, and has well over 30 initiatives ​​ including accelerators, incubators and training programs to help move more startups led by diverse founders into the venture capital funding pipeline. However, there remains plenty of opportunity in tracking data trends and supporting actions for change. World Business Chicago will continue to study how best to track and learn how other leading cities are supporting diverse founders in order to drive growth.


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About World Business Chicago

World Business Chicago serves a critical role in driving inclusive and equitable recovery throughout the city’s 77 neighborhoods, focused on high growth sectors: transportation, distribution, & logistics; manufacturing; healthcare & life sciences, and our local innovation, startup, & venture ecosystem. As the City of Chicago’s economic development agency, World Business Chicago leads corporate attraction & retention, workforce & talent, community impact, and promotion of Chicago as a leading global city. Supported by a council of 300+ local leaders, World Business Chicago’s portfolio of Innovation & Venture programs include: the Chicago Venture Summit series, Startup Chicago, ThinkChicago, and Venture Engine with the Illinois Science and Technology Coalition (ISTC). Follow World Business Chicago on LinkedIn for daily news and announcements on company relocation and expansion; industry and ecosystem growth, U.S. and world rankings, and more about Chicago’s economic progress.