When Uncharted Power founder Jessica O. Matthews delivered a pitch to venture capital investors in the fall of 2015, she did it in costume — her company happened to be celebrating Halloween the day a friend brought by some venture capital investors, unannounced.

“I was not concerned, being dressed as Serena Williams, who is everything,” Matthews told Next City. “Can’t say the same for other members of the team.”

Whether or not the costume had anything to do with it, Matthews did end up raising $7 million in venture capital, putting her Harlem-based company on the path to developing products that generate power from being walked upon, driven upon, kicked or pushed around — so far.

A new report reveals that black women founders like Matthews are indeed on the rise when it comes to venture capital investment, though there is still very far to go for venture capital investment in the United States to reflect the country’s true diversity. Released yesterday, ProjectDiane 2018: The State of Black Women Founders is the second biennial report providing a snapshot of the state of black women founders and the startups they lead in the United States.

According to ProjectDiane 2018, the amount raised by black women founders increased 500 percent, from $50 million in 2016 to $250 million in 2017. Still, Black women raised only 0.0006 percent of all tech venture funding since 2009, the report found. Despite the number of startups founded by black women more than doubling since 2016, a majority of startups founded by black women still have not recieved any venture capital funding, according to the report.

To produce the ProjectDiane 2018 report, the research firm digitalundivided reviewed over 8,000 U.S.-based startups and companies located in the Crunchbase, Pitchbook and Mattermark databases as well as updated data from the ProjectDiane2016 database. The firm also reached out to organizations working with black and Latinx entrepreneurs and startups, and employed an online survey to collect additional data. Funding for the report came from JPMorgan Chase, the Case Foundation, and the Ewing Marion Kauffman Foundation.

Covering the years 2015-2017, the ProjectDiane 2018 report encompasses a period when more black-led venture capital firms have come into existence and into the headlines.

John Henry, who sold his on-demand laundry startup and founded Harlem tech accelerator Cofound Harlem, went on to co-found Harlem Capital Partners in 2015, which has promised to invest in 1,000 ventures led by people of color over 20 years.

Arlan Hamilton founded Backstage Capital also in 2015, raising $5 million in capital to invest in female, minority, and LGBTQ entrepreneurs. She made headlines again earlier this year, announcing a $36 million fund to invest exclusively in startups founded by other black women, TechCrunch reported.

Increasing diversity in tech and other popular venture-backed sectors (such as food) isn’t merely a charity case for investors. There’s an economic case to be made, as well.

“[Hamilton] gets access to entrepreneurs that your typical [Silicon] Valley investor might not,” says Lars Rasmussen, an angel investor and veteran of Google and Facebook who invested in Backstage Capital’s first $5 million fund, told Inc. Magazine. “It’s almost like using an unfair advantage by knowing Arlan and using her connections into an area that is overlooked, and wrongly overlooked.”

Oscar is Next City's senior economic justice correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha and Fast Company.

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