In March, customers of Silicon Valley Bank (SVB) began to panic as rumors swirled about a potential collapse. The largest technology hub bank in the world held billions of dollars from the tech industry and was showing signs of instability. As customers scrambled to withdraw their funds, some entrepreneurs of color found themselves in a particularly precarious position.

When word began spreading of possible financial turmoil at SVB, venture capitalist Arlan Hamilton sprang into action. She reached out to her network of startups led by Black and Brown founders to offer a solution. These founders were disproportionately affected by the banking crisis since they often relied on SVB for payroll funds.

The collapse of Silicon Valley Bank has served as an unpleasant reminder that disparities in the tech industry still persist. Entrepreneurs of color are more likely to face funding gaps and lack access to essential resources, such as reliable banking services. According to a 2019 study by Project Diane, Black women founders received just $36,000 on average from investors between 2016 and 2018 – a stark contrast to the $1.5 million raised by white male-led startups during that same period.

Background: Silicon Valley Bank’s Role in Tech Industry Silicon Valley Bank has long been a staple in the tech industry, serving as the go-to financial institution for numerous startups and venture capital firms. Its proximity to the heart of innovation in California made it an attractive option for those looking to establish themselves within this burgeoning sector. However, its importance extends beyond just location; SVB offers specialized services tailored specifically to the unique needs of tech companies.

Impact on Entrepreneurs of Color: Funding Disparities and Lack of Access The disproportionate impact on entrepreneurs of color during times of financial instability is a reflection of larger systemic issues within the industry. According to data from Crunchbase, only 1% of venture capital funding in Q3 2022 went to Black founders, while Latinx and Asian founders received just 4%.

These disparities can be attributed to various factors, including lack of access to networks, unconscious bias among investors, and limited resources. In the case of SVB’s collapse, entrepreneurs of color were hit particularly hard due to their reliance on the bank for payroll funds – a necessity that could not wait until alternative arrangements could be made.

Arlan Hamilton Steps Up: Offering Relief to Entrepreneurs of Color During Crisis In response to this crisis, Arlan Hamilton, founder and managing partner at Backstage Capital, offered assistance to her network of startups led by underrepresented founders. She