Of the $48 billion in venture capital up for grabs during the third quarter of 2022, Black entrepreneurs only received $187 million (or 0.43 percent) and Latinx, $2.7 billion (or 1.5 percent). Meanwhile women-founded companies were allocated only 1.9 percent of all VC funds last year, down from 2.4 percent in 2021, despite companies with diverse founders making up nearly 20 percent of all employer businesses, according to recent U.S. Census reports.

These are examples of the type of inequity in funding that, last year, made Laurel Mintz want to launch Fabric VC, a venture capital firm that works with underrepresented founders at the earliest stage of starting their companies. The firm focuses on Web3 consumer packaged goods (CPGs), consumerized healthcare and digital health tools, Gen Z and Gen Alpha fintech, plus platforms solving for the future of work.

At its core, though, Mintz says Fabric pairs together diverse founders with the funding they need and deserve—diverse companies are 36-percent more profitable than less diverse ones, according to McKinsey & Company’s The State of Diversity in Global Private Markets: 2022 report. And gender-diverse executive teams are 25-percent more likely to experience above-average profitability.

What’s worse is that whenever there’s a decrease in available venture capital, like during times of economic downturn and recessions, underrepresented founders are affected the most.

“Underrepresented, to me, is a holistic bucket,” Mintz says. “We are fully inclusive: BIPOC, female, and queer founders are all welcome and prioritized. It’s what’s best for the planet, for people, for purpose, and for profit.”

Shifting the venture capitalism landscape

The problem with venture capitalism, Mintz says, is that “it hasn’t really shifted since the beginning of time, and that’s because [people] who have money and power have no incentive to change it—even though we know that if diverse-run companies receive funding, they return at a better rate.”

Mintz is hopeful, though, that group efforts will be the catalyst for a foundational change. She shouts out Jesse Draper at Halogen Ventures and Arlan Hamilton Backstage Capital as two other key figures making funding more inclusive and diverse. “We are saying, what has happened historically cannot be the future of venture—we deserve more,” Mintz adds. “We’re hoping to create a new venture movement, honestly, one that isn’t so pale, male, and stale.”

Producing a pipeline to profitability

In 2009, Mintz founded Elevate My Brand, a digital marketing and events agency that’s worked with 204 diverse-run companies. “From the Elevate My Brand side of the business, we’ve seen how these companies evolve, how they grow from a baby startup to the growth stage, to a successful exit,” says Mintz.

So far, 75 of the companies she’s worked with through Elevate My Brand have gone on to successfully raise capital. “That’s a 37 percent raise rate, which is pretty unreal,” says Mintz. This type of early intervention model could help ensure diverse founders receive access to the resources they need to launch, and successfully scale, their companies at the point where an influx of venture capital could make or break their business plan.

Ultimately, though, Mitz believes it’ll take more than herself and Fabric or even a handful of VC firms focused on the diversification of venture capitalism to really make a difference—real change will require representation on both sides of the table.

“I would love to see more women, people of color, and queer people investing,” says Mintz. “It’s been a very interesting journey to talk with them and see how they invest differently.”

Written by Natalie Arroyo Camacho