Venture capital gets less diverse in 2020

On Friday, The Exchange covered new data concerning the venture capital results of female founders during the third quarter. The data set was U.S.-focused, but we can presume that it is illustrative of global trends. Regardless of that nuance, the data was depressing.

In the third quarter, U.S.-based female founders and co-founders raised 136 rounds worth $434 million, per PitchBook data. That was a handful more rounds than Q2 2020, but far fewer dollars. And it was down across the board compared to Q3 2019. Even more, as we noted in the piece, the aggregate venture capital world did very well.

Here’s some PwC data making that point, and a bit more from my old employer Crunchbase. What matters is that female founders are doing worse when VCs are super active. This will only perpetuate inequalities and inequities in the startup market.

Speaking of which, here’s some more bad news. Vern Howard Jr., the co-founder and CEO of Hallo, a startup that has raised nearly $2 million, according to Crunchbase, compiled some data on Black founders’ VC performance in Q3. Here’s what he set out to do:

[W]e wanted to put hard numbers behind the promises of so many venture capitalists and create a benchmark for how we can track the investment into black founders over time. So our team pulled a list from Crunchbase of all the startups globally with a total funding amount of $500,000 — $20,000,000 and who raised a round between July 1 and October 1. There were over 1383 companies here and our team went through one by one, to see how many Black founders there were.

There were 31.

Now, you could open up the funding bands to include both smaller and larger funding events, but regardless of the data boundaries, the resulting number — just 2.2% of the total — is a disgrace.

Market Notes

• The OpenDoor-SPAC deal became clearer this week as we got a scratch at its financials. Some of the data is rough. Some of it is good. But we can now understand the bull case for its future, which helps.
• Affirm announced that it has filed privately to go public, while Root filed publicly to go public. More on the Affirm news here and a dig into the Root S-1 here.
• Make sure to check out YCharts’ exit to a PE firm. The startup told TechCrunch that it will pass $15 million in annual recurring revenue this year. Which should mean that it sold for a pretty penny.
• Greycroftraised an ocean of new capital, to the tune of $678 million spread between a $310 million fund for early-stage checks, and a $368 million fund targeting growth-stage deals.
• Why do we care about Greycroft? We don’t, per se, but it is worth noting that VCs are still able to raise during the current crisis. We often talk about how founders are managing to raise during COVID, and this is something that VCs have to do, as well.
• TechCrunch dug into the API startup space, talking to VCs and founders alike about the space and why it’s blowing up in 2020.
• Airbnb’s summer was painful, but its rebound may prove legendary. The Exchange examined how it managed to bounce back so quickly.
• And finally, from Market Notes, some rounds that you should not miss: Zira.airaised $3.1 million, Grid AIraised $18.6 million to help machine learning devs do more, Instacart raised $200 million more at a valuation of nearly $18 billion, mmhmmraised $21 million in the best-named round of the week, Unqorkraised $207 million and we dug into what that means for the no-code market, and GoPuff raised $380 million more in an epic round that values the delivery startup at $3.9 billion.

Various and Sundry

• Continuing our coverage of the savings and investing boom that fintech startups around the world have been riding this year, Freetrade, a British Robinhood if you will, told The Exchange that it crossed £1 billion in September order volume. That’s not bad!
• Freetrade also recently launched a paid version of its service, as the payment-for-order-flow method of generating revenue that Robinhood is growing on the back of is not allowed across the pond.
• Sticking to the fintech world, Yotta Savings is a startup that provides a savings option to its users, with the added chance of winning a big monetary prize for having stored their money with the startup. Folks have been whispering in my ear about the company for a bit, but I’ve held off writing about it until now as it was not clear to me if the model was merely a gimmick, or something that would actually attract customers.
• Well, Yotta grew from 8,000 accounts to more than 30,000 in the past few weeks and has reached the $100 million deposit mark. So, I guess we now care.
• Coinbase lost one in 20 employees to its new strategy of standing neutral during political times on anything that its CEO deems as unrelated to its core mission, which, as a for-profit company with tectonic financial backing, is making money.
• On the same topic, Can from The Marginsmade a salient point that “no politics is a political stance.” Correct, and it is a very conservative one at that.
• Even more, Coinbase’s CEO made noise about how his company will “work to create an environment where everyone is welcome and can do their best work, regardless of background, sexual orientation, race, gender, age, etc.” Whether he likes it or not, this is a political stance, and one that has nothing to do with the company’s stated core mission. And a political fight earned it — namely, equal access to the workplace.
• I’ll toss in a plug for this piece on the matter from a VC that TechCrunch published, and these thoughts from a tech denizen on how to guarantee that your company lands on the wrong side of history on essentially everything.
• Wrapping our grab-bag this week, Ping Identity bought ShoCard. Ping is now a public company, so normally its deals would land outside our wheelhouse. But we care in this case because TechCrunch has covered ShoCard (2015: “ShoCard Is A Digital Identity Card On The Blockchain”), and because the startup does crypto-related work.
• Seeing a public company snap up a blockchain startup for real money, on purpose and out loud, doesn’t happen every day. More here if you want to read about the deal.

Wrapping, this newsletter is a lot of fun and I appreciate your reading it. It is, also, a work in progress. So feel free to hit respond to it and let me know what you want to see more of. Or hit respond and send me a cute pic of your pet. Either is fine by me.

Chat soon,

Alex