SoftBank Putting Venture Capital Out of Reach for Black Founders?

  • SoftBank’s Vision Fund has made 30 investments totaling over $30B
  • Total venture capital investment in 2017 was $213B

SoftBank (9984:JP +2.38%) continues to shake up Silicon Valley with its $98 billion Vision Fund. The fund is placing massive bets around the world yet black founders continue their struggle to secure venture investments. Could SoftBank’s presence further increase the challenge black founders have in raising capital?

Why This Matters: SoftBank is changing the venture capital industry. In 2017 venture capital firms invested $213.6 billion in startups. SoftBank’s Vision Fund deployed 14% of that capital on its own and has $68 billion more to invest. In 2016, venture capital firms deployed $173 billion. SoftBank’s investment comprised 80% of the difference between 2016 and 2017.

There has been a lot of conversation in Silicon Valley about the lack of funding black founders have been able to secure. They account for less than one percent of venture capital funding. SoftBank’s presence has taken some of the focus away from this conversation as venture capital firms figure out how to compete with it.

Online training center Founder Gym and venture capital firm Plexo Capital are working on both sides of this issue. Founder Gym coaches diverse startup founders on how to best position themselves for venture funding. Plexo Capital which is run by Lo Toney is raising $50 million to invest in minority venture capitalists. Plexo’s thesis is that women and minority investors have a broader outlook and will catch opportunities typical venture capitalists would miss. These two firms and others like them may be key to black founders securing funding for their ventures.

What’s Next: Keep an eye out for new funds run by black venture capitalists. Monique Woodard, formerly of 500 Startups has been mum on her plans since leaving the firm. It’s likely she’s in the process of raising her own fund. In regards to Plexo Capital, most funds take about 18 months to raise their capital, so we may hear about the firm closing it’s fund later in 2018.

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