Home Venture Capital Are leaders of Chicago startups becoming more diverse?

Are leaders of Chicago startups becoming more diverse?

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“It is incredibly heartening to see how much movement we’ve had coming out of COVID,” said Desiree Vargas Wrigley, chief innovation officer and executive director of TechRise, a program of P33 that supports tech founders from underrepresented identity groups. “In terms of how many women founders and founders of color now in our city, it seems like the numbers are really tilting in the favor of representation and equity.”

The share of CEO positions in Chicago that were filled by individuals who weren’t cisgender men almost doubled, increasing from 12 to 30. Latino and Black CEO representation also grew. According to Chicago:Blend’s raw data, Chicago gained nine Hispanic CEOs and 10 Black CEOs since 2020.

The analysis also provided insights on representation among founders in addition to chief executive officers. Latino and Black founders together now make up almost 20% of the report’s founder pool, demonstrating that the sector is inching closer to resembling the city’s diverse makeup. Latinos and Black people make up 29% of Chicago’s population apiece, according to the Census Bureau’s 2021 estimates.

“We are encouraged by the findings. Chicago is making big strides on racial, ethnic and gender representation among founders and CEOs who are launching and leading venture-backed companies in the region,” said Joey Mak, Chicago:Blend’s executive director, in a statement. “There is still a lot of room for improvement, but this speaks to the tenacity of our region’s entrepreneurs and the supportiveness of the broader startup and tech ecosystem.”

One of those areas in need of improvement is access to capital and funding sources. No companies surveyed having at least one Latino founder have raised more than $20 million, while startups that reported having at least one Black founder haven’t exceeded $50 million. The only founder groups surveyed that surpassed the $100 million mark are white and Asian men.

On average, companies with founders who aren’t cisgender men raised $1.9 million from sources within Illinois and $3.1 million from sources outside of the state. Comparatively, men founders on average raised twice as much from Illinois sources and $4.9 million from out-of-state funds.

Vargas Wrigley thinks that if more venture-capital funds would self-report their average check size for different identity groups, that could help close the gap. “I think what gets measured gets changed,” she said. “And if we want to see real change in terms of the amount of capital going to women and founders of color then we need firms to report accurately on what kind of checks they’re actually writing to underrepresented founders.”

Chicago-region startups do outpace the country’s overall when it comes to gender representation on boards. Since 2020, the total share of local board seats filled by individuals who aren’t cisgender men increased by 70%. In contrast, seats held by women nationally also grew during a similar period, but at the slower rate of 27%. The organization utilized a study published by Crunchbase and Him for Her for the comparison.

Editor’s note: Crain’s reported on survey findings of venture capital-backed startups in the Chicago area only. The previous 2020 startup report included data from both local and other U.S.-based venture capital-backed startups while the 2022 report included the Chicago area only. Chicago:Blend provided the Chicago-specific comparison data.

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