Dallas, Chicago and San Diego have the lowest proportion of seed funding going to women, Latinx and Black founders, according to a recent report by seed-stage investor Beta Boom.
The report looked at regional seed-stage data from Crunchbase as a proxy for activity and availability of capital for diverse founders. The proportions used compares the number of women-, Black- or Latinx-owned start-ups to the number of all seed deals in that particular jurisdiction to form an underrepresented proportion.
The underrepresented proportions for San Diego, Chicago and Dallas are 11.8 percent, 10.8 percent and 10.3 percent respectively. According to the firm, this is “striking” because of the high minority populations in those cities.
“Each of those cities [Dallas/Ft Worth, Chicago, San Diego, Seattle and Austin] has about 10 to 12 percent of seed funding going to start-ups led by women or people of color despite about half of their population belonging to minority groups,” the report said.
Among the top 50 most populous metro areas in the US, Charlotte, North Carolina represents the highest proportion of seed funding being allocated to diverse founders (35.7 percent), with Washington, DC taking second place with 25.9 percent. San Francisco and New York, more predictably, took the third and fourth spots.
San Francisco and New York City have long been the go-to start-up hubs for founders of all kinds. But even though the pandemic has fueled migrations out of major cities and moved some investors elsewhere, San Francisco and New York remain at the top with the largest number of diverse founder-led start-ups.
San Francisco comes in at the top spot with 166 diverse-led start-ups, with New York following at 100. Los Angeles comes in third with 47, according to the report.
“Los Angeles has consistently been the biggest source flow for us at Beta Boom – by a very large margin – since we started investing in 2018,” the report added. The other cities coming in the top 10 for diverse-led start-ups include Denver, Atlanta, Philadelphia, Chicago and Seattle.
Beta Boom, which was founded in 2018, focuses on investing up to $200,000 in SaaS, healthtech, fintech and consumer software companies in Salt Lake City, Chicago, Los Angeles and New York.
“The most surprising finding for us was the lack of correlation, in many cases, between the availability of capital and the activity of diversity-led start-ups in the metro areas that we studied in the analysis,” the report said.