Venture capital and the clean energy sector notoriously lack diversity

  • Black founders receive less than 1.5% of the approximately $330 billion in venture capital funding in the United States.
  • Black and brown communities are largely excluded from the clean energy industry.
  • Cleantech entrepreneur and venture capitalist 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 his startup’s first pitch meeting and noticed a stark difference between him and the lenders sitting across the table. The piece reflected a big part of the venture capital industry: white men.

“When I walked into the room, I remember thinking that none of these investors looked like me,” Oni said.

Oni was successful that day and in those that followed. He secured funding for his cleantech company, Cloverly, which allows users to neutralize their carbon footprint by matching each carbon-generating transaction with an equivalent carbon credit investment.

And when a group of venture capitalists invited Oni to join their company, he said yes. He is now Managing Partner of Energy Impact Partners, a venture capital firm specializing in financing sustainable energy projects.

Anthony Oni, Managing Partner and CEO EIP Elevate Future Fund

“Today’s climate solvers will be tomorrow’s millionaires. We aim to ensure everyone has fair access to capital that will allow them to be part of the biggest economic change of our lifetimes,” Oni told Insider.

Antoine Oni

Yet for all of Oni’s success, the lack of diversity he witnessed during the process of securing funding for his business dogged him.

“Being Black working in the clean tech space was a challenge and getting the attention of mainstream VCs was an alien quest. There are unwritten rules about access and privileges,” he said.

“The challenge persists far beyond capital investment. Black entrepreneurs and founders also need access to foundational and educational support networks,” Oni said.

To meet this need, Oni launched two educational initiatives. One, called Ed Farm, is a workforce development program that offers technology development programs for teachers, coding boot camps and digital instruction for adult learners, as well as rigorous entrepreneurial training for middle school students in Birmingham, Alabama.

The other, called Propel Center, is an Atlanta, Georgia-based learning center focused on technology, entrepreneurship, education, and social impact. With support from Southern Company and Apple, the Propel Center offers programs to help students attending historically black colleges and universities get started in the clean energy industry.

Leveling the playing field in VC space

Oni’s efforts to attract more minority cleantech entrepreneurs come as the amount of funding black founders draw from venture capital firms has remained miniscule. This is the case even though more and more black entrepreneurs started businesses at the height of the pandemic.

From February 2020 to August 2021, the number of black-owned businesses in the United States jumped 38%, making black Americans the fastest growing group of entrepreneurs in the country. Yet barely 1% of venture capital funding went to black entrepreneurs in 2020.

A subsequent increase was modest and appears to have fizzled. In 2021, venture capital funding for black founders hit 1.3% after the 2020 murder of George Floyd prompted financial industry leaders to make new commitments to close the racial wealth gap. Yet in the second quarter of this year, startup funding from black founders plummeted as investors braced for economic headwinds.

The message seems clear: funding black-founded startups is not a priority.

“Today, 93% of venture capital funds are controlled by white men, which has important ramifications for capital injections into the black business community,” Oni said.

As a venture capital partner, Oni knows what being in the room means for founders of color looking to grow their business. When deciding where to deploy capital, he thinks about choosing investments that will help the environment, create substantial financial returns and help reduce socio-economic gaps.

Energy Impact Partners has targeted $100 million in investments for various clean energy companies, a goal the company is approaching. One startup that has captivated Oni and her partners is ChargerHelp!, a black women-owned company that provides services to maintain electric vehicle charging stations.

Empowering Black and Brown Communities for a Clean Energy Transition

Even if more venture capital funds invest in minority-owned businesses, the flow of capital is unlikely 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 reduce the country’s greenhouse gas emissions. Last week, President Joe Biden signed into law a bill that allocates $370 billion to clean energy. The effort, which is the largest climate push ever in the United States, is expected to lead to an economic boom in the renewable energy sector.

Dequan Xiao, renewable energy expert and associate professor of physical chemistry at the University of New Haven, said there were concerns about whether underrepresented communities, who are largely excluded from the renewable energy industry, clean energy, will be able to participate in the growth of the sector.

“Certain elements of the bill address the disproportionate impact of climate change on poor communities of color. But more could and should be done to ensure that these communities can take advantage of the great opportunities of clean energy,” said said Xiao.

Oni’s approach of providing small-scale investments for young clean energy startups, achieving strong financial returns, and providing education platforms to empower minorities in the clean energy industry is the one he believes will deliver results for the groups most at risk in a changing climate. and pay dividends over the long term.

“Today’s climate solvers will be tomorrow’s millionaires,” Oni said. “We aim for everyone to have equitable access to capital that will allow them to be part of the biggest economic change of our lifetime.”

Comments are closed.