Minimum Viable Signal: Venture Funding, Social Movements, and Race

Matt Marx, Qian Wang and Emmanuel Yimfor

No 33227, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: J15 M13 (search for similar items in EconPapers)
Date: 2024-12
New Economics Papers: this item is included in nep-his and nep-lab
Note: PR
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w33227.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:33227

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w33227
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().