New research out of Rock Health found that Black startups are reporting greater barriers to accessing capital and connecting with investors than their white, Asian and Hispanic counterparts. The new report, called the Diversity in Digital Health report, zeroed in on how health tech funding is getting distributed across races and backgrounds. 

For example, the survey found that 10% of white male founders’ companies were bootstrapped, but 57% of Black female founders reported their companies were bootstrapped. Overall, Asian men were the group most likely to have their companies venture backed (72%), whereas Black women were the least likely (14%). 

Additionally, 41% of Black founders across genders said their company was bootstrapped. This was higher than their white (23%), Hispanic (21%), Asian (22%) and Middle Eastern (20%) counterparts. According to the report, 63% of Asian founders reported that their companies were venture funded. However, 24% of Black founders’ companies were venture backed.

“It is possible that certain groups may be more likely to build companies that do not require venture capital and yield venture returns, but we want to spotlight the bias that likely plays into these funding disparities. In fact, our survey finds that Black leaders rate access to capital and investors as more significant barriers to building their companies relative to their White and Asian counterparts,” authors of the study wrote. “When considering who is most likely to access venture capital, racial bias may be at play, as well as gender bias.”

Researchers also found some regional differences in the makeup of the founder demographic. Notably the South had the highest proportion of Black founders. In fact, in this region Black and white founders were equally represented, with 38%. 

Meanwhile, in the West, only 4% of founders were black. This was similar in the Northeast, where black founders only made up 9% of founders. However, researchers noted that the bulk of venture funds and larger deals are taking place in those two regions. 

The survey included responses from 678 startup leaders in the digital health ecosystem. In addition to the survey, researchers also sat down with digital health investors and founders of color to gain more insights. The majority of survey takers were white (59%), followed by those of Asian descent – including south, southeast, and eastern Asia (20%). Black responders made up 8% of those represented, and Hispanic responders made up 6%. 

Researchers compared its survey takers to the U.S. Census data and found that white representation is fairly consistent, Asians are overrepresented in the DDH study, and Black and Hispanic respondents are underrepresented.

WHY IT MATTERS 

As the numbers reveal, there is a gap in the opportunities for Black founders in digital health. The report highlights that the majority of Black respondents aren’t seeing the field improving. 

When asked if the industry has become more inclusive since they started working in the industry, 56% of Black founders said that the digital health industry has remained the same since they began working in it. Additionally 15% of founders said it was worse, and 12% said it was a lot worse. In contrast, 15% said it was slightly better. 

However, 70% of Black respondents did report tapping into a diversity network and that the service was helpful. 

THE LARGER TREND 

The conversation about racial inequities has been front and center this year. In the digital health industry we saw a wave of responses from tech companies, startups and professional organizations following weeks of protests and demonstrations in June that highlighted the pervasive and long-standing issues of racism, racial inequality and police brutality. 

Big tech and digital health companies alike put out statements both standing in solidarity with their fellow Americans, but also about taking more action as an organization to make change. While many commended these efforts, some in the field are looking for next steps. 

“My impression [of the responses] has been ‘Great! Now let us know what the action steps are going to be.’ It's one thing to have optics around statements and announcements, but it's another thing to do the work needed to bring sustainable change," André Blackman, founder and CEO of Onboard Health, an executive recruiting firm dedicated to promoting diversity, wrote in an email to MobiHealthNews in June. 

"Take action by hiring more people of color and sending resources directly to the founders. That's it. We've talked at length about diversity 101 (we've seen enough webinars). If companies are really focused on impact, those are the two areas to make it. Internal investment."