While Wall Street struggles to contain the banking crisis after the swift demise of SVB, industry experts predict it could become even harder for people of color to secure funding or a financial home supporting their startups.
VIDEO: Silicon Valley Bank files for bankruptcy
“All these folks that have very special circumstances based on their identity, it’s not something that they can just change about themselves and that makes them unbankable by the top four ,” said Asya Bradley, a board member of numerous startups who has watched the WhatsApp group grapple with SVB's demise.
“That’s going to be more challenging for people who don’t fit the traditional credit box, including minorities,” Klein said. "A financial system that prefers the existing holders of wealth will perpetuate the legacy of past discrimination.” A February Crunchbase News analysis determined funding for Black-founded startups slowed by more than 50% last year after they received a record $5.1 billion in venture capital in 2021. Overall venture funding dropped from about $337 billion to roughly $214 billion, while Black founders were hit disproportionately hard, dropping to just $2.3 billion, or 1.1% of the total.
“If we’re focused on climate or communities of color or racial equity, that has nothing to do with what happened with Silicon Valley Bank,” said Valerie Red-Horse Mohl, co-founder of Known Holdings, a Black, Indigenous, Asian American-founded investment banking platform focused on the sustainable growth of minority-managed funds.
But the ripple effects from SVB's collapse are being felt among these banks as well, said Nicole Elam, president and CEO of the National Bankers Association, a 96-year-old trade association representing more than 175 minority-owned banks.
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