World Business Chicago
180 North LaSalle Street
Chicago, IL 60601
(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.
“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:
“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.