There has been a relatively slight uptick in new Black venture fund managers. Of these emerging fund managers, anecdotally, a more significant percentage of them have a stated focus on investing solely in Black or People of Color entrepreneurs. Given the current funding landscape, where a dismal amount of venture capital goes to Black entrepreneurs, increasing access to funding should be celebrated and encouraged. I personally love seeing Black entrepreneurs receive funding and will do a double applaud (salute and backflip) when I see a Black investor at the helm of the decision. And at the same time, I genuinely question if my work advocating for more Black investors to invest in Black people is a genuine interest or an unreluctant necessity for a mission-driven Black woman who sees/understands how systematic racism impacts Black people’s access to capital, entrepreneurship, and other opportunities to generate wealth within Black communities. 

Last year, I read Caste: The Origins of our Discontents, written by Isabel Wilkerson. A friend recommended the book before the release of the movie Origin, which is based on the book mentioned above. Due to my experience working in racial equity, the context of the book was familiar. Still, I was interested in the new language, lingo, and definitions presented by the author used to describe race relations in the United States. The book describes race relations in the United States as a caste system, similar to India and other places. In Wilkerson’s description, White people in the United States rule as the dominant or ruling caste, while Black people are the lowest members of the caste system. Other races are described as being in between.

My biggest takeaway from the book was a chapter detailing how caste systems often dictate available career paths. The book gives an example of when Black people were permitted secondary education opportunities in the United States, often the highest professional career paths available were to become teachers, lawyers, or doctors for other Black people. The chapter prompted reflections on its relevance for venture capital and its current racial demographics. 

At HBCUvc, we increase the number of Black investors working in venture capital. One of the reasons we advocate for Black investors is to increase investments in Black entrepreneurs. According to a recent Techcrunch article, investments in Black entrepreneurs have decreased for the third consecutive year. In 2023, only 0.48% of venture capital dollars went to Black entrepreneurs. In April 2023, NVCA’s Human Capital report, which monitors venture capital demographics, showed that the number of Black investment professionals was increasing. Black representation in investment partners rose to 4% from 3% in 2018 and 2020. However, what hasn’t been measured is the number of new Black general partners (GPs) or fund managers who have created new funds that solely focus on investing in Black or People of Color entrepreneurs.

Based on my anecdotal experience, a higher than usual percentage of Black GPs have funds dedicated to investing in Black or People of Color entrepreneurs. This includes funds created after the 2020 George Floyd murder when corporations and foundations allocated temporary funding to support new GPs who committed to supporting Black entrepreneurs. A common complaint I hear from Black GPs who don’t explicitly focus on Black entrepreneurs is that there is an assumption from funders that all Black GPs categorically are impact investors or an assumption that Black GPs can only invest in Black entrepreneurs. Conversely, I know many Black GPs who are intrinsically motivated to invest solely in Black entrepreneurs as part of their personal mission.

Drawing parallels to Wilkerson’s insights on caste systems’ impact on available career paths, I wonder whether the inclination towards investing in Black entrepreneurs among Black GPs is a genuine choice or the manifestation of a caste system within venture capital. Ultimately, the response to the question mentioned earlier isn’t binary. It’s a multifaceted inquiry that demands introspection and dialogue among limited partners, GPs, and the greater venture capital community. By unpacking these motivations and confronting systemic racism head-on, we can pave the way for a more inclusive and equitable venture capital ecosystem.