VC Report: Social Equity and Funding Gaps

On Dec 27, 2022

¹ Kapor Capital (2019). Kapor Capital Impact Report.

https://impact.kaporcapital.com/wp-content/uploads/2019/05/2019-Kapor-Impact-Report.pdf

² Stanford Law School (2017). Miriam Rivera: Changing the Venture Capital Diversity Equation. https://law.stanford.edu/stanford-lawyer/articles/miriam-rivera-changing-the-venture-capital-diversity-equation/

³Times of Entrepreneurship (2021). No More ‘Diversity Theater’: New Class Of LatinX Venture Capitalists Launches Funds. https://timesofe.com/investors-who-ignore-latinx-entrepreneurs-may-be-ignoring-the-next-big-thing/

⁴ Harlem Capital (2020). 305 Black and Latino Founders Who Raised $1mm+ in VC Funding ($10.8bn Total). https://harlem.capital/305-black-and-latino-founders-who-raised-1mm-in-vc-funding-10-8bn-total/

Methodology

This report is based on two surveys conducted on behalf of Morgan Stanley by Brunswick Group:

The VC survey was conducted between October 14, 2021 and March 2, 2022 in the U.S. The survey was conducted online among 97 venture capitalists who are almost exclusively leads or co-investors. The VCs who were invited to participate in the survey were provided by Morgan Stanley and were supplemented with panel-provided sample. The 2020 survey was among 76 venture capitalists and the 2019 survey was among 58 venture capitalists.

The profiles of the survey respondents were as follows:

White men: 34%

White women: 13%

Multicultural men: 22%

Multicultural women: 25%

Declined to answer: 6%

The Diverse Founders survey was conducted between October 14, 2021 and March 1, 2022 in the U.S. The survey was conducted online among 84 company founders or entrepreneurs that identify as women and/or multicultural (i.e., people of color) that sourced investments by venture capitalists to fund their company. The founders who were invited to participate in the survey were provided by Morgan Stanley and were supplemented with panel-provided sample.

The profiles of the survey respondents were as follows:

White women: 40%

Multicultural men: 13%

Multicultural women: 45%

Declined to answer: 1%

The definition of “multicultural” that was provided to respondents in these surveys was “Black/African-American, Hispanic/Latino, Asian, and all other nonwhite persons.”

This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this material may not be appropriate for all investors. Morgan Stanley Wealth Management recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Morgan Stanley Wealth Management is a business of Morgan Stanley Smith Barney LLC.

The returns on a portfolio consisting primarily of Environmental, Social and Governance (“ESG”) aware investments may be lower or higher than a portfolio that is more diversified or where decisions are based solely on investment considerations. Because ESG criteria exclude some investments, investors may not be able to take advantage of the same opportunities or market trends as investors that do not use such criteria. Diversification does not guarantee a profit or protect against loss in a declining financial market.

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