Venture capital funding for Black-led startups has seen a significant decrease, especially after the Supreme Court’s decision to block affirmative action in college admissions. Diversity, equity, and inclusion (DEI) programs are also under attack, with the Fearless Fund facing an injunction to provide grants exclusively to Black female entrepreneurs. Despite this, Google for Startups has launched its Black Founders Fund and Latino Founders Fund, awarding grants to a total of 20 startups with AI-based business models. Each founder receives $150,000 in non-dilutive cash, $100,000 in Google Cloud credits, and access to mental health resources and mentorship.
In 2023, funding for Black founders decreased by 71%, nearly twice as much as overall venture capital funding. Google for Startups has invested $50 million since 2020 in Black and Latino-led startups, leading to over $590 million in follow-on and other funding. The startups receiving Google funding this year cover a range of industries, all utilizing AI technology. These include companies specializing in smart home energy management, eliminating human bias from financial services, agricultural technology, facility decarbonization, education platforms, and climate insurance.
One of the companies receiving a Google award is Hue, recognized by Forbes on the 2023 30 Under 30 list in the retail and commerce category. Founded by Nicole Clay and Janvi Shah, Hue uses AI to personalize online makeup shopping, providing shade recommendations and customer reviews based on skin tone. The platform aims to address the lack of representation in the beauty industry and the dissatisfaction of Black consumers with available options. Despite raising $2 million in funding, Clay emphasizes the continued challenges Black founders face in securing adequate funding and the importance of mentorship and support in key areas like mental health.
Hue’s platform was born out of Clay’s personal experiences with shopping for beauty products and the importance of seeing oneself represented in brands to build trust. The company’s use of AI technology to provide personalized recommendations aims to create a more inclusive and empowering shopping experience for customers. A report by McKinsey & Co. highlights the lack of Black representation in venture capital-backed beauty companies, despite the high revenue generated by Black brands compared to non-Black brands. The report reveals the significant untapped opportunity in serving Black consumers in the beauty industry.
Clay recalls the beginnings of Hue, initiated by a Zoom call during her time at Harvard Business School, which led to the creation of a platform focused on building technology in an empathetic way. The company’s success in securing funding and recognition underscores the potential for Black-led startups in the industry. The mentorship and resources provided by Google for Startups are seen as crucial for the success and growth of these startups, particularly in overcoming systemic barriers and accessing adequate support.
Overall, the efforts of Google for Startups in supporting Black and Latino founders through grants, resources, and mentorship are vital in addressing the funding gaps and challenges faced by underrepresented entrepreneurs. The success of companies like Hue demonstrates the potential impact of diversity and inclusion in the startup ecosystem, providing innovative solutions for underserved markets and driving meaningful change in the industry. As venture capital funding for Black founders continues to decline, initiatives like the Black Founders Fund play a critical role in empowering and uplifting underrepresented entrepreneurs towards success and sustainability.
