VC funding for black Web3 founders bucked the trend last year

VC funding for black Web3 founders bucked the trend last year

Much hope remains after the cryptocurrency winter nearly froze the industry: the Luna crash, Celsius bankruptcy, and the arrest of FTX founder Sam Bankman-Fried for alleged fraud. Then there was the company’s setback in the midst of an economic downturn.

In 2021, web3 startups worldwide raised a record $29.2 billion. By 2022, that number will have dropped to $21.5 billion, though it’s still much more than the combined totals of $4.8 billion and $4.2 billion generated by these companies in 2020 and 2020, respectively, in 2019.

Black investors in cryptocurrencies have been disproportionately affected over the winter, though many black founders and investors who spoke to TechCrunch remain optimistic about the sector’s potential for the wider community and society. Last year’s economic correction was at least necessary, they told TechCrunch.

“The bubble had to burst,” said Simone Baya, co-founder of People of Crypto. “It was unsustainable and an economic solution was needed. The recession eliminated bad players who only entered the space to make a quick buck. It created an opportunity to break the hype cycle and pave the way for development that ensures the ecosystem grows sustainably and creates value.”

Pryce Adade-Yebesi, co-founder of Utopia Labs, agrees. “This period was a legitimate outgrowth of a period of wild speculation and fraud,” he told TechCrunch. “It will be a good time to focus on returning to the reality of solving widespread problems in the world; it’s a huge change of pace for space.”

Funding for the Black web3 founders only increased and the crypto winter turned out to be their most fruitful year yet. Crunchbase data shows Black US Web3 founders raised $60 million (out of the total $11.9 billion awarded to all Web3 startups in the US by 2022). This amount is significantly higher than the $16 million these founders received in 2021 during Crypto’s record year (US Web3 startups received $16.5 billion that year).

In 2017 they raised $11 million of $1.03 billion and in 2018 they raised practically zero of about $2.8 billion; Note the red line decreasing in the chart below. In 2019 and 2020, Black web3 founders raised $2.5 million and $4.5 million of $2.4 billion and $3.2 billion, respectively.

Fundraising has been difficult for many black founders over the past year as many have been hit by the recession, though it is quite telling that Web3’s black founders have managed to raise record amounts amid a widespread slump in Web3’s funding market. It seems that investors are also somewhat optimistic about black founders, a change in tone from how these entrepreneurs are generally viewed.

Data visualization of Miranda Halpernmade with bloom

Source: La Neta Neta