Venture Capital and Underserved Communities

Abstract

Access to equity capital is critical for the growth of businesses, especially for young companies, which lack the cash flows necessary to repay loans. To meet this need, a thriving venture capital industry has evolved, fostering job creation, economic growth, and innovation in the United States. Not all companies, however, have been equally able to access such investments. Firms owned by women and people of color and those located in rural and distressed urban regions of the country have been underserved by the venture capital industry. This note analyzes the factors responsible for this and proposes policies designed to ensure a more equitable economic landscape.

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