In the United Kingdom, Black entrepreneurs are making strides to tackle systemic challenges in the venture capital (VC) ecosystem, even as funding opportunities for minority founders stagnate. Despite growing awareness of racial inequities in business, new data highlights that investment for Black founders remains stubbornly low, with many turning to innovative approaches to secure the capital needed to grow their ventures.
A Persistent Funding Gap
According to Extend Ventures, Black founders in the U.K. received a mere 0.23% of venture capital funding in 2018, a figure that has seen only modest improvements since. While the tech sector celebrated record-breaking investment levels of $40 billion in 2021, the share allocated to Black founders peaked at just 1.13%. By 2023, however, this number dropped to 0.95%, reflecting a rollback in diversity and inclusion (DEI) efforts since the global reckoning sparked by the Black Lives Matter movement.
For Black entrepreneurs like Ayesha Ofori, founder of the female-focused financial platform Propelle, navigating the VC landscape has been fraught with systemic barriers. Despite her impressive credentials—including stints at Morgan Stanley and Goldman Sachs, as well as an MBA from London Business School—she faced repeated rejections.
The Challenges of Bias and Quotas
Systemic biases and unwritten quotas exacerbate the difficulties faced by Black founders. Sarah Wernér, co-founder of property management company Husmus, highlighted the damaging effects of racial quotas within VC firms.
Wernér also revealed how racial bias often forces Black founders to resort to unconventional strategies. Using her white husband’s email address to secure meetings with investors or leveraging her ambiguous-sounding name, she has had to navigate a system that disproportionately favors white entrepreneurs.
Building Community-Focused Solutions
To counteract these challenges, many Black founders are turning to alternative funding models, including “friends and family” rounds. Wernér described receiving her first £10,000 check from a university friend, an act of trust and support that inspired her to seek help from her wider network. These early-stage contributions from trusted individuals help founders build momentum, often leading to larger investments from high-profile backers.
Similarly, Ofori leveraged her network of former colleagues at Goldman Sachs to secure funding. Her participation in Google for Startups’ Black Founders Fund, which provided her with an initial $100,000, became a “catalyst” for attracting further investments. This underscores the importance of programs focused on fostering minority entrepreneurship.
The Role of Community Initiatives
Initiatives like Black Tech Fest, organized by former Google employee Ashleigh Ainsley and Silicon Valley tech executive Dion McKenzie, have been instrumental in building support networks for underrepresented founders. Since launching their organization, Colorintech, they’ve helped founders raise over $50 million and built a community of more than 60,000 people. “We wanted to shine a spotlight and give a platform to folks in the industry who are underrepresented,” McKenzie said.
Through partnerships with major corporations like Meta, Google, PwC, and JPMorgan, the duo aims to address the data gap in tracking funding for ethnic minority founders while fostering a diverse and inclusive tech ecosystem.
A Global Perspective on DEI Rollbacks
The decline in VC funding for Black founders coincides with a broader rollback of DEI efforts globally. In the U.S., companies like McDonald’s, Google, and Walmart have scaled back diversity programs, citing cost pressures and political backlash. Donald Trump’s incoming administration has further raised concerns about the future of federally funded DEI initiatives.
In contrast, the U.K. offers a glimmer of hope. The Labour Party’s pre-election pledge to introduce a Race Equality Act aims to break down systemic barriers to opportunity. However, with investment in Black founders in Britain still failing to surpass 1%, much work remains to be done.
A Call for Change in VC Leadership
As Karl Lokko, founder of Black Seed—a VC fund dedicated to startups led by Black founders—explained, diversity at the leadership level of VC firms is critical to addressing systemic inequities. “If the investment committees reflect more of a diverse lens, there can be a more well-rounded consideration of the propositions being evaluated,” Lokko said.
Ultimately, as industries strive to rebound from the setbacks of recent years, fostering diversity is not just a moral imperative but also a business one. “A more diverse workforce leads to better products, better teams, and ultimately more revenue,” McKenzie emphasized. For Black entrepreneurs, their persistence and innovation in the face of adversity continue to inspire a new generation of founders and investors alike.
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