Business News
Venture capital for Black entrepreneurs plummeted 45% in 2022, data shows


Bea Dixon, the CEO and co-founder of The Honey Pot Company
Courtesy: Honey Pot Company
In 2016, Beatrice Dixon had finally secured a deal with Target to carry her line of feminine care products. But she had one problem: She was still making them in the kitchen of her Atlanta home, and she needed to scale up — fast.
The CEO and co-founder of The Honey Pot Company, a vaginal-wellness brand, was faced with the “impossible” task of launching in 1,100 stores and needed funding to bring on manufacturers so she could deliver on the retailer’s orders.
She managed to secure that crucial round of financing from the New Voices Foundation, a fund led by Richelieu Dennis that’s devoted to supporting women entrepreneurs of color. Using that financing, and some funding from family and friends, Dixon was able to quit her job, move operations out of her kitchen and launch in Target stores nationwide by 2017.
Some six years later, Dixon’s products are a staple in retailers across the country.
“It was really hard, man, we weren’t having any luck,” Dixon told CNBC in a recent interview about the struggles she faced securing investors. “I don’t know what would have happened if we didn’t get that money.”
Dixon is one of many Black entrepreneurs who struggled to secure funding for their businesses and relied on venture capital financing earmarked for diverse founders. While Dixon and many others have ultimately succeeded, Black-led businesses and Black founders have historically faced disparities in securing VC funding.
Overall, Black entrepreneurs typically receive less than 2% of all VC dollars each year while companies led by Black women receive less than 1%, according to data from Crunchbase.
In the wake of the police murder of George Floyd and the racial justice reckoning that followed, Black founders and Black-led startups saw historic gains in securing VC funding in 2021. However, as momentum around the movement fizzled and market conditions worsened, a lot of those gains were lost by the end of 2022.
While overall VC funding dropped by 36% in 2022 as inflation and interest rates surged, financing for Black businesses saw a steeper drop of 45%, according to the Crunchbase data. That drop is the largest year-over-year decrease Black entrepreneurs have seen over the past decade.
“There were a lot of political and cultural strife problems in 2020 and early 2021 that created a higher focus on Black and diverse founders,” said Kyle Stanford, a senior analyst at Pitchbook. “No one wants that to be the reason why they focus on investing in any group, but that did put a lot of focus on the problems that VC has had investing in anyone outside of a straight white male.”
Marlon Nichols, the co-founder and managing general partner of MaC Venture Capital, said diverse businesses tend to take the brunt of VC slowdowns because firms typically resort to the status quo in times of economic uncertainty.
“We’ve always invested in white men and that’s what we’re going to do right now. That’s where we’re comfortable. That’s where we know and believe that we’re going to get the return,” is how Nichols, who is Black, described the decisions made by some firms. “This diversity thing is cool, we’ll pick it back up maybe, you know, once we’ve weathered this storm.”
So-called ‘risky bets’
In 2014, Dixon was working at Whole Foods and suffering from an ongoing case of bacterial vaginosis that she wasn’t able to shake. Then, she said, her late grandmother came to her with a solution — in a dream.
“She just told me that she had been walking with me and seeing me struggle and she knew how to fix it, and she basically hands me a piece of paper that has a list of ingredients on it and she tells me to memorize what’s on the paper,” Dixon said, recalling the dream of her grandmother. “I made it within a couple of days, and, basically, this formula actually healed me.”
The mixture, which included ingredients such as lavender, apple cider vinegar, grapefruit seed extract and rose, worked for family and friends, too, Dixon said. Using a $21,000 loan from her brother, she began selling the product and displaying it at trade shows and expositions.
Honey Pot Company products
Courtesy: Honey Pot Company
Using her connections at Whole Foods, she got the product on the shelves of the store but wasn’t able to seriously scale up and attract outside investors until she secured the deal with Target.
“It was hard. Us being Black-owned business founders, was it harder? Sure, it probably was,” said Dixon. “I think every time we raised money, we had trouble doing it, you know, but I think that the important context to put there is that anybody that raises money, it’s not going to be easy.”
While he doesn’t invest exclusively in diverse businesses, Nichols said he’s more likely than some venture capitalists because MaC Venture Capital is led by a diverse team unlike other firms that are typically run by white men.
“The investors are primarily white and male and usually come from affluent communities, which means that they have very specific experiences and have been exposed to very specific things and are comfortable with very specific things,” said Nichols, whose latest firm opened in 2019.
To many firms, investing in founders from diverse backgrounds is considered a riskier bet because the entrepreneurs differ from the norm they’ve become accustomed to, said Ladi Greenstreet, the CEO of Diversity VC, which works to tackle systemic bias within venture capital.
In the aftermath of Floyd’s murder in May 2020, many major banks, corporations and investment firms pledged to change that — and make diversity a top priority moving forward.
However, the steep funding drop-off Black founders saw in 2022 indicates some of those promises may have been short-lived charity plays rather than investments that firms actually believed would bring in strong returns.
“When you take venture capital financing, the expectation is that, you know, you have a partner now, if you perform, your partner is going to continue to back you, they’re going to help you to raise that next round of funding, right?” said Nichols.
For white-led teams, there’s no expectation that recipients have to be “extraordinary” in their first two years of operations in order to get follow-on funding, but the bar is far higher for Black entrepreneurs, said Nichols, whose firm manages about $450 million in assets.
“For most of these Black founders, that’s exactly like the expectation, you’ve got to be extraordinarily exceptional in order to get additional capital,” he said. “And if you’re truly treating this like all investments that you make then that shouldn’t be the case.”
‘Huge blue ocean’
Pocket Sun is the co-founder and managing partner of SoGal Ventures, a VC firm devoted to supporting women and diverse entrepreneurs. Since the firm opened in 2016, it has seeded multiple unicorns, or startups that grew to have valuations over $1 billion. The businesses include Function of Beauty and Everly Health.
“From a financial investment perspective, this remains a huge blue ocean for people to dive in,” said Sun.
“Venture capital is a very privileged and exclusive industry, and has always been that way. And it has such disproportionate decision-making power on the future of technology, the future of innovation, the future of quality of life in many ways,” said Sun.
While investing in diverse teams can often be seen as a moral imperative and something that’s done because it’s the right thing to do, studies have shown it can lead to higher returns for investors, said John Roussel, the executive director of Colorwave.
Honey Pot Company products
Courtesy: Honey Pot Company
“And somehow, we’re still stuck in this situation where we’re trying to convince people of that,” said Roussel, whose organization connects early stage founders to mentors and capital. “It really takes, you know, strong players taking a lead and showing people that there is opportunity here and there is generally the same success rates regardless of someone’s skin color.”
Dixon, the founder of The Honey Pot, pointed to her own success as an example. “Clearly, it’s safe to bet on Black businesses,” she said.
Products from the company are now in 4.6 million homes, nearly double the number from two years ago. They are also sold nationally in retailers such as Walmart, CVS, Walgreens and more. The Honey Pot didn’t share its current valuation or how much it makes in annual sales.
Dixon called on investors to put their biases aside and see companies for their basics: balance sheets, innovation strategies and business goals, not the skin color of its teams.
“My skin color shouldn’t be a part of the conversation, period,” she said. “And yet, it still is, right?”
Business News
Lucid to cut 1,300 workers amid signs of flagging demand for its EVs


Lucid Motors CEO Peter Rawlinson poses at the Nasdaq MarketSite as Lucid Motors (Nasdaq: LCID) begins trading on the Nasdaq stock exchange after completing its business combination with Churchill Capital Corp IV in New York City, New York, July 26, 2021.
Andrew Kelly | Reuters
Struggling EV maker Lucid said in a regulatory filing on Tuesday that it plans to cut about 18% of its workforce, or roughly 1,300 employees, as part of a larger restructuring to reduce costs as it works to ramp up production of its Air luxury sedan.
Lucid said it will incur one-time charges totaling between $24 million and $30 million related to the job cuts, with most of that amount being recognized in the first quarter of 2023.
News of the job cuts was first reported by Insider earlier on Tuesday. Lucid’s shares closed down over 7% on Tuesday following the Insider report.
In a letter to employees, CEO Peter Rawlinson said the job cuts will hit “nearly every organization and level, including executives,” and that affected employees will be notified over the next three days. Severance packages will include continued healthcare coverage paid by Lucid, as well as an acceleration of equity vesting, Rawlinson wrote.
Lucid ended 2022 with about $4.4 billion in cash on hand, enough to last until the first quarter of 2024, CFO Sherry House told CNBC last month ahead of the company’s fourth-quarter earnings report. But there have been signs that demand for the high-priced Air has fallen short of Lucid’s internal expectations, and the company may be struggling to convert early reservations to sold orders.
Lucid said that it had more than 28,000 reservations for the Air as of Feb. 21, its most recent update. But it also said that it plans to build just 10,000 to 14,000 vehicles in 2023, far fewer than the roughly 27,000 that Wall Street analysts had expected.
With Lucid’s factory currently set up to build about 34,000 vehicles per year, the company has warned of continuing losses.
“As we produce vehicles at low volumes on production lines designed for higher volumes, we have and we will continue to experience negative gross profit related to labor and overhead costs,” House said during Lucid’s earnings call on Feb. 22.
Lucid hasn’t yet announced a date for its first-quarter earnings report.
Business News
Virgin Orbit extends unpaid pause as Brown deal collapses, ‘dynamic’ talks continue


NEWQUAY, ENGLAND – JANUARY 09: A general view of Cosmic Girl, a Boeing 747-400 aircraft carrying the LauncherOne rocket under its left wing, as final preparations are made at Cornwall Airport Newquay on January 9, 2023 in Newquay, United Kingdom. Virgin Orbit launches its LauncherOne rocket from the spaceport in Cornwall, marking the first ever orbital launch from the UK. The mission has been named Start Me Up after the Rolling Stones hit. (Photo by Matthew Horwood/Getty Images)
Matthew Horwood | Getty Images News | Getty Images
Virgin Orbit is again extending its unpaid pause in operations to continue pursuing a lifeline investment, CEO Dan Hart told employees in a company-wide email.
Some of the company’s late-stage deal talks, including with private investor Matthew Brown, collapsed over the weekend, people familiar with the matter told CNBC.
Hart previously planned to update employees on the company’s operational status at an all-hands meeting at 4:30 p.m. ET on Monday afternoon, according to an email sent to employees Sunday night. At the last minute, that meeting was rescheduled “for no later than Thursday,” Hart said in the employee memo Monday.
“Our investment discussions have been very dynamic over the past few days, they are ongoing, and not yet at a stage where we can provide a fulsome update,” Hart wrote in the email to employees, which was viewed by CNBC.
Brown told CNBC’s “Worldwide Exchange” last week he was in final discussions to invest in the company. A person familiar with the terms told CNBC the investment would have amounted to $200 million and granted Brown a controlling stake. But discussions between Virgin Orbit and the Texas-based investor stalled and broke down late last week, a person familiar told CNBC. As of Saturday those discussions had ended, the person said.
Separately, another person said talks with a different potential buyer broke down on Sunday night.
The people asked to remain anonymous to discuss private negotiations. A representative for Virgin Orbit declined to comment.
Hart promised Virgin Orbit’s over 750 employees “daily” updates this week. Most of the staff remain on an unpaid furlough that Hart announced on Mar. 15. Last week, a “small” team of Virgin Orbit employees returned to work in what Hart described as the “first step” in an “incremental resumption of operations,” with the intention of preparing a rocket for the company’s next launch.
Virgin Orbit’s stock closed at 54 cents a share on Monday, having fallen below $1 a share after the company’s pause in operations.
Virgin Orbit developed a system that uses a modified 747 jet to send satellites into space by dropping a rocket from under the aircraft’s wing mid-flight. But the company’s last mission suffered a mid-flight failure, with an issue during the launch causing the rocket to not reach orbit and crash into the ocean.
The company has been looking for new funds for several months, with majority owner Sir Richard Branson unwilling to fund the company further.
Virgin Orbit was spun out of Branson’s Virgin Galactic in 2017 and counts the billionaire as its largest stakeholder, with 75% ownership. Mubadala, the Emirati sovereign wealth fund, holds the second-largest stake in Virgin Orbit, at 18%.
The company hired bankruptcy firms to draw up contingency plans in the event it is unable to find a buyer or investor. Branson has first priority over Virgin Orbit’s assets, as the company raised $60 million in debt from the investment arm of Virgin Group.
On the same day that Hart told employees that Virgin Orbit was pausing operations, its board of directors approved a “golden parachute” severance plan for top executives, in case they are terminated “following a change in control” of the company.
Business News
Historic UAW election picks reform leader who vows more aggressive approach to auto negotiations


Supporters wave signs during an address at the Time Warner Cable Arena in Charlotte, North Carolina, on September 5, 2012 on the second day of the Democratic National Convention (DNC).
Mladin Antonov | AFP | Getty Images
DETROIT – United Auto Workers members have ousted their president in the union’s first direct election, ushering in a new era for the prominent organized labor group ahead of negotiations later this year with the Detroit automakers.
The union’s new leader will be Shawn Fain, a member of the “UAW Members United” reform group and local leader for a Stellantis parts plant in Indiana. He came out ahead in a runoff election by hundreds of votes over incumbent Ray Curry, who was appointed president by union leaders in 2021.
Fain, in a statement Saturday, thanked UAW members who voted in the election. He also hailed the election results as a historic change in direction for the embattled union, which he says will take a “more aggressive approach” with its employers.
“This election was not just a race between two candidates, it was a referendum on the direction of the UAW. For too long, the UAW has been controlled by leadership with a top-down, company union philosophy who have been unwilling to confront management, and as a result, we’ve seen nothing but concessions, corruption, and plant closures,” Fain said.
Curry, who previously protested the narrow election results, said in a statement that Fain will be sworn in on Sunday and that Curry is “committed to ensuring that this transition is smooth and without disruptions.”
“I want to express my deep gratitude to all UAW staff, clerical support, leaders and most of all, our union’s active and retired members for the many years of support and solidarity. It has been the honor of my life to serve our great union,” Curry said.
More than 141,500 ballots were cast in the runoff election that also included two other board positions, a 33% increase from last year’s direct election in which neither of the presidential candidates received 50% or more of the votes.
The election was overseen by a federal monitor, who did not immediately confirm the results. The election results had been delayed several weeks due to a run-off election as well as the close final count.
Shawn Fain, candidate for UAW president, is in a run-off election with incumbent Ray Curry for the union’s highest-ranking position.
Jim West for UAW Members United
Fain’s election adds to the UAW’s largest upheaval in leadership in decades, as a majority of the union’ s International Executive Board will be made up of first-time directors who are not part of the “Administration Caucus” that has controlled the union for more than 70 years.
Fain and other members of his leadership slate ran on the promise of “No corruption. No concessions. No tiers.” The last being a reference to a tiered pay system implemented by the automakers during recent negotiations that members have asked to be removed.
The shuffle follows a yearslong federal investigation that uncovered systemic corruption involving bribery, embezzlement, and other crimes among the top ranks of the UAW.
Thirteen UAW officials were convicted as part of the probe, including two past presidents. As part of a settlement with the union in late 2020, a federal monitor was appointed to oversee the union and the organization held a direct election where each member has a vote, doing away with a weighted delegate process.
For investors, UAW negotiations with the Detroit automakers are typically a short-term headwind every four years that result in higher costs. But this year’s negotiations are anticipated to be among the most contentious and important in recent memory.
Fain has said the union will seek benefit gains for members, advocating for the return of a cost-of-living adjustment, or COLA, as well as raises and job security.
The change in the UAW comes against the backdrop of a broader organized labor movement across the country, a pro-union president and an industry in the transition to all-electric vehicles.
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