Why This Gap Exists
Starting a business is hard for everyone. But for many Black, Latino, Indigenous, and veteran founders, it’s even harder. Not because their ideas are worse. Not because they work less. But because the system wasn’t built with them in mind.
Only 1.2% of U.S. venture funding goes to Black founders. Latino founders receive about 2%. Women of color? Less than 1% combined. Veteran entrepreneurs, despite being more likely to own a business than civilians, are often denied the early support needed to get going.
Many banks still use rigid credit models. Venture capital leans on networks that exclude. Private equity rarely steps into early-stage minority-owned businesses.
As one founder in Atlanta put it, “You can have the same pitch deck, same product, and still get passed over if you’re not already in the room.”
This isn’t just a fairness issue. It’s an economic one. Closing this capital gap could add trillions to the U.S. economy. More businesses. More jobs. More innovation.
What Makes Access So Hard?
Underserved founders often lack three things:
- Network Access
Many early-stage deals happen through connections. Warm intros. Back-channel references. If you didn’t go to the right school, or grow up in the right zip code, you’re out. - Collateral or Credit
Traditional lenders want to see assets or credit scores. But first-time founders, especially those from marginalized communities, might not have either. That doesn’t mean they aren’t capable. - Investor Trust
Sometimes bias is loud. Sometimes it’s quiet. But it shows up in who gets second meetings. Who gets feedback. Who gets believed.
David Rocker, who works closely with underserved entrepreneurs through NYSA Capital, said, “One of the biggest challenges is getting people to see these founders as serious. Not as a side hustle. Not as a charity case. But as leaders building scalable businesses.”
The System Isn’t Broken. It Was Built This Way.
For years, funding systems were designed around certain norms—who looked the part, who could take the risk, who already had wealth. Those norms didn’t include everyone.
The result? Most early-stage investors still fund people who look like them. The same schools. The same networks. It’s not always intentional. But the impact is the same: billions in missed opportunities.
As one founder said after being rejected for the fifth time, “It’s hard not to feel like they want innovation—but only from the usual faces.”
Real Solutions That Work
This isn’t a mystery. We know what works. We just need to do more of it—and do it better.
Start With Mentorship, Not Just Money
Founders need capital. But they also need coaching. Legal help. Market research. Product feedback. A good mentor is worth as much as a check.
Set up structured mentorship programs. Pair experienced investors with founders from outside their usual circles. No pitch required. Just real conversations.
Rocker adds, “We don’t just write a check and disappear. We walk with them through the messiness. That’s where trust is built.”
Build Funds That Reflect the Market
More than 40% of the U.S. population is non-white. That’s not reflected in fund managers. To change outcomes, we need more people of color and veterans managing capital.
Some funds are already doing this—Backstage Capital, Harlem Capital, Visible Hands. But they’re small. We need 100 more like them.
Pension funds, universities, and institutions can help. Move more assets into emerging fund managers who know these communities.
Simplify Early-Stage Lending
Banks often say they want to help small business. But their loan applications say otherwise.
Make lending easier for early-stage founders. Use alternate data—like cash flow, invoices, or Stripe accounts. Skip outdated credit models. Support CDFIs (Community Development Financial Institutions) and mission-driven lenders who already know how to do this.
And stop asking first-time founders to show a decade of financials. They’re just getting started.
Create Paths Into Venture and Private Equity
Not everyone wants to pitch VCs. But those who do should have a shot.
Universities, accelerators, and corporations can sponsor “capital readiness” programs. Not just how to pitch—but how to structure a business to scale. How to speak the language of investors.
At the same time, investors need to learn too. Mandatory bias training won’t cut it. Get them out of the bubble. Introduce them to founders building real things in communities they’ve never visited.
Tech Alone Won’t Solve It
There’s no app that will fix trust. Or rewrite bias. Or replace relationships.
Yes, we can build platforms that connect founders to funding. But someone still has to open the door. Someone has to listen. Someone has to believe.
What works best is showing up. Over and over. Not just at demo day. But when the first hire quits. When the product breaks. When the founder’s not sure it’s working.
That’s how you build a culture that truly supports new builders.
What You Can Do Right Now
- If you’re an investor: Take five cold meetings this month. No referrals. Just listen.
- If you’re a founder: Join a peer group. Share leads. Teach others what you’ve learned.
- If you’re in a corporation: Sponsor a grant, host a workshop, or fund a local accelerator.
- If you’re in media: Cover stories that aren’t already in TechCrunch.
- If you’re a customer: Buy from a small business run by someone different than you.
You don’t have to build a fund. Or quit your job. You just have to show up—where it matters, when it matters.
Conclusion
Making capital more accessible for underserved founders isn’t charity. It’s common sense. It’s good business. It’s how we grow an economy that actually works for everyone.
And as David Rocker put it best, “Access is everything. But it’s not just about the money. It’s about showing people they belong in the room—and giving them what they need to stay there.”
Let’s build more of those rooms.