Abstract
How do venture capital investors react to social movements, especially those that relate to historical underrepresentation in their funding decisions? We use image and name algorithms combined with clerical review to classify race for 150,000 founders and 30,000 investors. Our new data allow us to assess the impact of George Floyd's murder on VC funding of Black entrepreneurs and identify which VCs were most responsive. Although VCs responded swiftly, investment in Black-owned startups reverted to prior levels within two years. This temporary reaction was concentrated among those who had never previously invested in any Black entrepreneur. Moreover, the investors who responded were less likely to invest substantial time to monitor and mentor Black entrepreneurs by taking a seat on the board of directors. Finally, it appears that the best Black entrepreneurs may have anticipated this "token" response, as they did not match with investors who had no experience funding Black startups.