Following the onset of the Black Lives Matter Movement in 2020, there was a major increase in investment for Black owned businesses by venture capitalists, according to a new study from scholars at Cornell University. However, those investments were short lived, returning to prior levels within just two years.
For their study, the authors analyzed data from PitchBook, a repository for information on public and private capital markets, from 2000 to 2023 regarding 150,000 business founders and 30,000 investors. After the murder of George Floyd on May 25, 2020, venture capitalists heavily invested in Black-owned businesses. However, the main increase in funding was from investors who had never previously invested in a single Black entrepreneur. Furthermore, these investors were less likely to invest in more than one Black-founded startup and were less likely to actively engage in the company, such as taking a seat on the organization’s board of directors.
“It’s not so much that the investors who had Black entrepreneurs in their portfolios doubled down,” said lead author Matt Marx, the Bruce F. Failing, Sr. Chair in Entrepreneurship at Cornell. “It’s more so that those who had basically nothing to say before were suddenly on the scene.”
In addition to Cornell University authors, the study included a researcher from Columbia University.
