This study examines the persistent funding gap for Black founders in venture capital and investigates the drivers behind this disparity. Employing a novel race-disambiguation algorithm, we find that only 3.47% of Black founders are in the pipeline. Our analysis provides partial support for the supply-side argument, suggesting that broader societal factors play a significant role. However, our theoretical model demonstrates that the distinction between supply-side and demand-side arguments is not clear-cut, as demand-side problems can influence the supply-side by affecting founders’ decisions to invest in skills that venture investors value. By comparing Black-founded and non-Black-founded startups in the same industry, state, and formation year, we quantify the funding gap, finding that Black-founded startups raise only one-third of the amount raised by their non-Black counterparts. Our research reveals that altering the composition of venture investors could substantially reduce the funding gap, as it narrows by nearly 50 percentage points when a Black lead partner is involved, and we show that Black lead partners fund successful Black startups within the same venture capital firm. Using the George Floyd social justice movements to suggest causality, we posit that the correlation between Black lead partners and the likelihood of funding for Black founders is causal. Back-of-the-envelope calculations suggest that a 7% representation of Black venture fund partners could equalize the likelihood of raising venture funding for Black and non-Black-founded startups, compared to the current figure of 3%.