For Black founders, venture funding remains elusive

When Donnel Baird first pitched his idea in 2014 to create a technology platform that could help small apartment buildings and other urban structures become energy efficient, he got the U.S. government to promise him $2.1 million, provided he could raise a similar amount from elsewhere.

But not one of some 200 venture capital firms he approached agreed to invest back then. Baird believes that initial funding was elusive in part because as a Black man without a background in software development, he was an outsider. Investors did not grasp the opportunity that seemed obvious to him as someone who had grown up in a predominantly Black, low-income neighborhood in Brooklyn, Baird told Reuters.

"That's one of the hardest things about being Black. It is really hard to tease out why things happen. All I know is that the VCs decided I could not pull off what I was talking about," Baird said in an interview. "Silicon Valley has a narrow archetype of what they like to invest in."

Some seven years later, the 39-year-old has become the recipient of one of the largest early-stage funding rounds ever raised by a Black entrepreneur.

His company, BlocPower, has raised $63 million in debt and equity, with the help of Goldman Sachs Group Inc and other investors. The bulk of the money will go toward financing energy-efficient heating and cooling systems for BlocPower's clients. The financing is both a sign that corporate America's growing acknowledgment of its diversity problem is beginning to lead to some change, and a stark reminder that the pace of change is slow. Interviews with Black entrepreneurs and investors as well as a Reuters analysis of venture capital data provided by Crunchbase, a business information company, show Baird is an outlier.