Angel investing in Black startups plummeted after 2020. These investors are trying to reverse the trend.

By Sharon Epperson, CNBC

As a young physician, Dr. Elizabeth Clayborne saw a need for a better way to stop nosebleeds, a common condition she saw at the hospital where she worked, especially among children. She developed a bandage-like device for your nose and secured patents for her invention, called “NasaClip.” Then, in 2020, the Washington, D.C.-Baltimore area physician launched a business to market the device.

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After tapping friends and family, many startups like NasaClip try to get funding from individual investors — so-called “angel investors” — at an early stage of their business. Yet only a fraction of those investors are Black. 

“I was heavily supported by angel investors who are interested in female and minority-owned businesses,” said Clayborne. “And really, without them, I would not be able to take these essential first steps to get to where I am today.”

Still, getting funding for a startup is challenging, especially for Black entrepreneurs and founders. In 2020, the year George Floyd was murdered, Black founders got a record 16% of angel investments, up from 0.5% in 2019. However, in 2021 that figure fell to just 2%, according to research from the Angel Capital Association, which represents individuals and groups of investors. 

That sharp drop going to Black founders was “disappointing,” said Pat Gouhin, CEO of the Angel Capital Association. “We’re still trying to do what we can to push to have as much funds go to those underrepresented communities as we can.”

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Supply chain issues also impact Black business owners.

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