We characterize the gap in venture-capital funding for Black entrepreneurs. Combining face-detection algorithms with extensive manual review, we classify the race of more than 150,000 U.S.-based founders and investors since 2000. Only 3.5\% of founders seeking VC funding are Black, and those who raise VC funding obtain substantially less than others. We attribute some of this gap to Black founders having fewer traditionally observable markers, such as past startup experience, patents, or networks. However, Black founders with these markers are just as likely to be receive funding. Interestingly, while Black partners at VC firms rely less on these traditional markers, they are more likely than their fellow partners to invest in Black founders, and these startups tend to have more successful outcomes when backed by Black partners compared to other VCs, even within the same firm. Our results suggest that Black partners are better able to select Black entrepreneurs who will succeed, due in part to lower information asymmetries given their overlapping prior professional experience.
