After the collapse of Silicon Valley Bank, there’s been a lot of talk about the importance of diversification in finance. In the startup world, though, Kange Kaneene says being able to diversify is “a luxury that some people just don’t have.”
“If you’re going to bank after bank and getting told no, it’s hard to diversify,” the vice president for SAP.io Foundries, the software giant startup accelerator in New York, San Francisco, Latin America and the Caribbean, told MarketWatch. Kaneene said Silicon Valley Bank was “a soft place to land” for many startup founders she called “underestimated,” such as women and people of color. The bank launched a program focused on increasing opportunities for underrepresented people in the “innovation economy,” but the future of that is as cloudy as that of the bank itself.
The venture-capital world, already affected by a tech slowdown and other economic worries before the failure of the bank, is now dealing with even more uncertainty that includes possible long-term effects from a banking crisis. The impact could be worse for VCs and startup founders who are women and/or people of color, a category that already saw a low share of venture funding.
Of all venture-capital funding last year, only 1.9% went to female founders, according to data from PitchBook. Usually, less than 2% of VC funding goes to Black entrepreneurs, according to Crunchbase; last year, while overall venture funding declined 36%, funding to Black-led businesses dropped 45%.