West Goldman Sachs CEO Ayesha Ofori was confident investors would want to fund her investment platform – then came the wall of rejection.
Some of the venture capitalists who gave Ofori the cold shoulder a female-focused financial investment platform, Propelleshe finally refused, citing her lack of experience. Ofori notes her background at Morgan Stanley, Goldman Sachs and her MBA from London Business School.
“Fundraising is really hard,” Ofori told CNBC. “I try not to think about it, because it brings you down… It's like your gender and your color the reason why you are not progressing as quickly as others.”
Ofori was one of a small number of Black founders in the UK to eventually get their business funded. But overall Black founders received just 0.23% of venture capital in 2018, according to data from Expand Ventures. That market share for the minority group has not increased much since then.
Britain's tech sector saw investment levels exceed $40 billion in 2021. Of that amount, Black founders saw their share of investment by value rise to a high of 1.13%, as did diversity and inclusion efforts with companies going up as a result of the The Black Lives Matter movement. The value of investment represented by the group has since fallen to 0.95% in 2023, according to data from Extend Ventures.
Ayesha Ofori, founder and CEO of Propelle.
Propelle
Ofori was confident that she “ticked all the boxes” in terms of what VCs were looking for from founders.
“Through the grapevine, talking to people behind closed doors, I was told that some black women got their chance. They raised VC money. willing to take the risk anymore,” Ofori explained.
Just 13 black women raised venture funding between 2019 and 2023, compared to more than 3,700 white men, according to Extend Ventures.
Like other Black founders in the UK, Ofori is looking to buck the downward trend in funding by targeting high-profile investors and adopting a more targeted approach to his ' a community that includes support for family and friends.
Battle for funding
CNBC spoke with several founders and VCs who noted that Black business leaders often face systemic challenges from racial stereotypes to an overall lack of diversity in the sector.
Sarah Wernér, who co-founded property management firm Husmus with her Swedish husband Mattias Wernér, said some VC firms accept quotas and reject Black founders once they're on the threshold to reach them. Other VC firms will pit Black founders against each other to compete for the limited funding they've been given, Wernér said.
“You're pitting people who are already in dire straits against each other… It's ridiculous to pit black people against each other, fighting for the same place on the pack that's assigned to a person of color,” she said.
Wernér, who said she is opposed to Husmus, told CNBC that her gender identity has often opened doors for her, as people are not immediately aware of her skin color. She also said that using her white husband's email address allowed her to get meetings with high-profile investors.
Karl Lokko, founder and managing partner of Black Seed, a VC fund for black-led startups, told CNBC that more diversity at the leadership level of VC firms is needed to overcome these biases.
“If the ICs (investment committees) show more of a diverse lens, the proposals that are evaluated and decided can be considered more carefully,” said Lokko. “So yes, more diversity, but more diversity that is really in the sea of decisions about where money will be allocated.”
Friends and family
At the end of October, thousands of students, VCs, CEOs and Diversity, Equality and Inclusion (DEI) experts gathered in North London for the fifth edition of Black Tech Fest – a festival set organized by Ashleigh Ainsley, a former Google employee, and Silicon Valley tech manager Dion. Mackenzie.
A recurring theme at this year's Black Tech Festival was the lack of data available documenting the proportion of funding and support received by minority founders. McKenzie described Europe as a “data desert.”
In response to the lack of data and representation in their industry, McKenzie and Ainsley founded Colorintech to foster a new community for people of color. Since launching, they say underrepresented founders on their program have raised more than $50 million in funding, and the community has grown to more than 60,000 people.
“We wanted to bring attention and give a platform to people in the industry who are underrepresented,” McKenzie said.
They have partnered with some of the biggest names in the sector, such as the owner of Facebook Meta, Google, PwC and JPMorgan.
Google also supported Propelle's Ofori and Husmus' Wernér, offering funding through a Google Black Founders Fund for Startups. Ofori, who received an initial investment of $100,000, said that getting into Google for Startups was a “catalyst” for money to start coming in.
Even when the people she previously rejected became interested, Ofori decided to focus on using her own community and network to move forward.
Black Tech Festival 2024
BTF by Colorintech
She also reached out to some of her former colleagues at Goldman and found high-profile investors including female entrepreneurs. One of Propelle's investors is former Goldman partner Stefan Bollinger, current CEO of Julius Baer.
Wernér referred to this support as a “friends and family” round – a type of early-stage fundraising where founders ask friends and family to invest in their business. She said it was from a university friend who offered her £10,000, which inspired her first check for her campaign, which encouraged her to contact other acquaintances.
“These are the people who know you. You've been in the trenches with them. You've pulled all-nighters with them in the library. They know you and they trust you, and they've given you money out of pocket. and there's nothing more humiliating than that to be honest,” she told CNBC.
A world away from the US
A spike in diversity and inclusion programs in 2020 when murders took place George Floyd has led to protests and racial unrest has not encouraged long-term investment in the Black community – a failure that is hurting the technology sector, according to Colorintech McKenzie and Ainsley.
If we think about the whole concept of growing Britain and making ourselves a more productive country, we cannot do that by increasing productivity differences across certain social groups, especially when 'these social groups … could be minorities, but they are'. it is not too small.
Ashley Ainsley
Colorintech
A more diverse workforce leads to “better results, better teams and ultimately more revenue,” McKenzie said, adding that more inclusive employers are allowing companies to “get the best talent.”
“If we think about the whole concept of growing Britain and making ourselves a more productive country, we cannot do that by increasing productivity differences across certain social groups,” said Ainsley, confirming, although these social groups may be minorities. , they are not “little.”
Four years after the Black Lives Matter Moment, the mood around diversity efforts has changed. Several companies including McDonald's, Google, Ford, at Lowe's and Walmart Yes it stifled diversity efforts in the US for reasons ranging from cost-cutting to political pressures. Donald Trump's incoming White House administration has raised concerns about the future of DEI, with the president-elect's proposals to cancel federally funded diversity programs.
Ashleigh Ainsley, former Googler and Dion McKenzie, Silicon Valley Technology CEO
BTF by Colorintech
In the UK the Labor Party has made a pre-election commitment to break down barriers to opportunity by introducing a Racial Equality Act offers a stark contrast to state expectations. Although the return of DEI corporate programs may not be as common in Great Britain, the value of investment represented by Black founders in the country has yet to exceed 1% as it did in 2021 and 2022, according to Extend Ventures.
Ainsley and McKenzie said DEI has become “politicized” and “weaponized” as a means of silencing the efforts of groups such as Colorintech.
“For better or for worse, DEI will certainly be a focal point of the next administration. We have heard a lot of anti-DEI rhetoric during the elections and actions planned once in office, but ultimately business leaders will be needed. to make a choice whether they, their employees and shareholders see the value of being diverse, inclusive and fair or whether the alternative is better for creating value and the best talent to attract,” McKenzie said.
