The Black Founders Fund

Back to Atlas

The Black Founders Fund is an initiative by Google for Startups that supports Black-led businesses. The fund provides selected founders with $150K in non-dilutive capital to boost their businesses as well as offering technical support.
What are the main aims and objectives?

The primary aims and objectives of the Black Founders Fund are to help promising Black founders grow their businesses and create generational wealth. It does this by providing non-dilutive cash funding and a range of support services such as mentoring, Google Cloud credits, and product support. The fund also seeks to address the underrepresentation and unique barriers faced by Black entrepreneurs in accessing venture capital and support for their businesses. A broader goal of the fund is to increase racial diversity in the startup community, and to support Black entrepreneurs who are building businesses with high-growth potential. The fund is positioned to rectify the existing disparity where a small fraction of venture capital dollars go to Black startup founders.

How does the program work?

The Black Founders Fund is a comprehensive initiative that supports Black-led businesses in several key ways:

  1. Non-dilutive Funding: The Fund provides $150K in non-dilutive funding to selected startups, a significant boost for early-stage companies. Non-dilutive funding means the money doesn't have to be repaid, and no equity is taken, allowing founders to retain control over their businesses.
  2. Technical Support: The provision of Google Ads and Google Cloud credits (up to the value of $100,000) allows these startups to leverage state-of-the-art technology and marketing tools, giving them a competitive edge in their respective industries.
  3. Mentorship: The Fund offers mentorship from industry leaders, helping founders navigate the complexities of running a startup. This mentorship can provide invaluable guidance, foster confidence, and equip entrepreneurs with the necessary skills to thrive.
  4. Community Building: The Fund aims to build a community of Black entrepreneurs, fostering a sense of belonging and providing a network for sharing experiences, knowledge, and resources.

The selection criteria for the Black Founders Fund include having a diverse company with at least one Black founder on the founding team. The startups should be in stages ranging from Pre-seed to Series A. They should also have a scalable product or service and be ready to go global. Other factors that can influence the selection include the value proposition of the novel idea or product. This set of criteria is aimed at ensuring that the Fund supports innovative startups with high growth potential.

What is the overall cost?

The Black Founders Fund is supported by a total pool of $45 million of which $15 million was distributed to US based founders.

How was it implemented?

The Google for Startups Black Founders Fund was established in 2020 as a response to the glaring funding gap experienced by Black-led startups. With less than half a percent of venture capital funding going to Black-led startups and Black people making up less than 3% of the venture capital community, Google saw a pressing need to create a platform that would level the playing field for Black entrepreneurs.

The Fund started in the United States, where the racial funding gap was particularly pronounced. However, recognizing significant potential beyond the borders of the US, Google expanded the program to other regions such as Brazil, Europe, and Africa. This expansion is intended to herald a new era of inclusive entrepreneurship, demonstrating the tech talent present in Europe and the other targeted regions.

What impact has been measured?

Over 547 startups have received funding since the program was launched in 2020. As of 2023, participants in the program have raised more than $400 million in investment. Furthermore, Google can demonstrate that the recipients of the first $10 million distributed (entirely within the US) went on to raise 13 times that amount with over $139 million secured in follow-on funding after the receiving the funding from Google. However, it is worth noting that no impact assessment of the program has been published so we can accurately assess the direct impact the program has had on the companies that participated or the wider economic benefits of the policy. 

What lessons can be learned?

The Black Founders Fund shows that targeted, concerted efforts can make a difference in addressing funding disparities for underrepresented groups. The Fund's effort to provide resources for Black founders appears to have helped recipients raise additional capital and grow their businesses. The initiative also demonstrates that beyond funding, there is significant benefits to offering a comprehensive support system that includes business coaching, mental health support, and mentorship.

One criticism of the program is that while $45 million is a substantial amount of funding, it falls short of the sums required to meet the stated objectives of the program. The scale of the funding gap experienced by Black-led startups would require even more substantial investment than is currently being offered.

CURATED BY

Tom Hancock

Research Associate
Global Entrepreneurship Network
United Kingdom