Minimum Viable Signal: Venture Funding, Social Movements, and Race / Matt Marx, Qian Wang, Emmanuel Yimfor.

Format:

Book

Author/Creator:

Marx, Matt.

Contributor:

Wang, Qian.

Yimfor, Emmanuel.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w33227.

NBER working paper series no. w33227

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2024.

Summary:

How do venture capital investors react to social movements, including those that relate to historical underrepresentation in funding? We use image and name algorithms combined with clerical review to classify race for 150,000 founders and 30,000 investors. These data allow us to assess the impact of George Floyd's murder on VC funding of Black entrepreneurs and identify which VCs were most responsive. Although VCs responded swiftly, investment in Black-founded startups reverted to prior levels within two years. This temporary reaction was concentrated among those who had never previously invested in any Black entrepreneur. Moreover, the investors who responded were less likely to invest in more than one Black-founded startup and were less inclined to engage deeply by taking a board seat. Finally, it appears that the best Black entrepreneurs may have anticipated this "token" response, as they did not match with investors who had no experience funding Black startups.

Notes:

December 2024.

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