- Black founders receive less than 1.5% of about $330 billion in venture capital funding in the US.
- Black and Brown communities are largely excluded from the clean-energy industry.
- Clean-tech entrepreneur and VC backer Anthony Oni hopes to level the playing field on both fronts.
- This article is part of a series called "Culture of Innovation" exploring how companies are setting the stage for innovation, transformation, and growth.
In 2019, Anthony Oni showed up to the first pitch meeting for his startup and noticed a stark difference between himself and the lenders seated across the table. The room reflected much of the venture capital industry: white men.
"When I walked into the room, I remember thinking, none of these investors look like me," Oni said.
Oni was successful that day and in those that followed. He won funding for his clean-tech company, Cloverly, which allows users to neutralize their carbon footprint by matching every carbon-producing transaction with an equivalent investment in carbon credit.
And when a group of venture capitalists invited Oni to join their firm, he said yes. He is now a managing partner of Energy Impact Partners, a venture capital firm specializing in funding sustainable-energy projects.
Yet for all of Oni's success, the lack of diversity he witnessed during the process of securing funding for his company nagged at him.
"Being Black working in the clean-tech space was challenging and getting the attention of traditional VCs was a foreign quest. There are unwritten rules about access and privilege," he said.
"The challenge persists far beyond the investment of capital. Black entrepreneurs and founders need access to foundational and educational support networks, too," Oni said.
To address that need, Oni started two educational initiatives. One, called Ed Farm, is a workforce-development program that offers technology upskilling programs for teachers, coding boot camps and digital instruction for adult learners, and rigorous entrepreneurial training for middle schoolers in Birmingham, Alabama.
The other, called the Propel Center, is an Atlanta, Georgia-based learning hub focused on technology, entrepreneurship, education, and social impact. With backing from Southern Company and Apple, the Propel Center offers programming to help students attending historically Black colleges and universities move into the clean-energy industry.
Leveling the playing field in the VC space
Oni's efforts to pull more minority entrepreneurs into clean tech comes as the amount of funding Black founders draw from VC firms has remained minuscule. That's the case even though more Black entrepreneurs started businesses during the depths of the pandemic.
From February 2020 to August 2021, the number of Black-owned businesses in the US jumped 38%, making Black Americans the nation's fastest-growing group of entrepreneurs. Yet barely 1% of venture funding went to Black entrepreneurs in 2020.
A subsequent increase was modest and appears to have fizzled. In 2021, VC funding for Black founders reached 1.3% after the 2020 murder of George Floyd prompted leaders in the financial industry to make new commitments to narrowing the racial wealth gap. Yet in the second quarter of this year, funding for startups by Black founders fell as investors braced for economic headwinds.
The message seems clear: Funding Black-founded startups isn't a priority.
"Today, 93% of venture capital funds are controlled by white men, which has significant ramifications on capital infusions into the Black business community," Oni said.
As a venture partner, Oni knows what his presence in the room means to founders of color seeking to build their businesses. When deciding where to deploy capital, he is thoughtful about choosing investments that will help the environment, create substantial financial returns, and help narrow socioeconomic gaps.
Energy Impact Partners has targeted $100 million in investments for diverse companies in the clean energy space, a goal the firm is nearing. One startup that captivated Oni and his partners is ChargerHelp!, a company owned by Black women, which provides services to maintain electric-vehicle charging stations.
Empowering Black and Brown communities for a clean-energy transition
Even if more venture funds invest in minority-owned businesses, the flow of capital isn't likely to prevent Hispanic, Latino, and Black communities from suffering the most from the climate crisis.
The US government will soon begin deploying unprecedented funding to slash the nation's greenhouse gas emissions. Last week, President Joe Biden signed into law a bill that allocates $370 billion toward clean energy. The effort, which is the most extensive climate push ever in the US, is expected to drive an economic boom in the renewable energy sector.
Dequan Xiao, a renewable energy expert and associate professor of physical chemistry at the University of New Haven, said there are worries about whether underrepresented communities, which are largely excluded from the clean-energy industry, will be able to participate in the growth of the sector.
"Some components of the bill address the disproportionate impact of climate change on poor communities of color. But more could and should be done to make sure these communities can profit from the great opportunities in clean energy," Xiao said.
Oni's approach of providing small-scale investments for young clean-energy startups, realizing a strong financial return, and providing education platforms to empower minorities in the clean-energy industry is one he expects will yield results for groups most at risk in a changing climate and pay dividends over the long term.
"The climate solvers of today will be the millionaires of tomorrow," Oni said. "We aim for all to have fair access to the capital that will enable them to be a part of the greatest economic shift of our lifetime."