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Black women, who are the fastest growing group of entrepreneurs in the United States, are consistently underfunded by venture capital firms. It has been observed by industry experts that minority founders who do not receive funding “get discouraged and exclude themselves from applying,” creating a cycle of exclusion for Black women and Black members of the LGBTQ community in the startup world.

This case study examines how boutique venture firm Backstage Capital, which invests in minority-owned startups, attempted to create a US$36 million fund exclusively for Black women and LGBTQ founders. It also profiles the issues of Black individuals’ underrepresentation across the American investment industry, venture capital, and startup entrepreneurship.

Course Topics:
  • Venture capital and startup
  • Diversity in STEM
  • Social entrepreneurship
  • Innovation


A cardinal stereotype of the startup world, the idea that “anyone can become a founder,” fails to fully match reality when it comes to Black women. A typical team of startup founders in the United States is comprised mainly of a single race and gender. In most cases, the “all male, all white” team is comprised of two people residing in Silicon Valley. Only 1% of venture-funded startup founders are Black. But even within the Black community itself, one group is more isolated from venture investments. Between 2009 and 2017, Black women have received only 0.0006% of venture capital financing.

Backstage Capital is a venture capital firm that attempts to address existing funding disparities and to promote diversity in startup entrepreneurship. While it invests in companies established by various minorities, Black-founded companies constitute the core group in which Backstage Capital is investing—69 out of 130 backed firms have at least one Black co-founder, some of whom are women and/or LGBTQ. In 2018, the firm announced its new project, a US$36 million fund that will invest exclusively in the startups led by Black women over the next few years. This fund will be important to generate profits for the firm and “to move the needle and to set the example” for the investment industry overall.

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This case was written by:

This case was written by Bashir Chalabi and Stephanie Taylor. The authors prepared this case under the supervision of Professor Sarah Kaplan, with guidance from Bonnie Lam and Vanessa Serra Iarocci and research assistance from Carmina Ravanera.