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Ex Goldman Sachs CEO Aisha Ofori was confident that investors would be interested in funding her investment platform startup – then came a wall of rejection.
Some of the venture capitalists who didn’t like Ofori’s female-focused financial investment platform Propelleultimately turned her down, citing a lack of experience. Ofori cites his education at Morgan Stanley, Goldman Sachs and an MBA from the London Business School.
“Fundraising is phenomenally difficult,” Ofori told CNBC. “I try not to think about it because it depresses you… Like your gender and the color of your skin is the reason you’re not progressing as fast as other people.”
Ofori was one of the few black founders in the UK who ended up getting funding for his business. But in 2018, black founders received only 0.23% of venture capital funding Expansion Ventures. This market share for the minority group has increased slightly since then.
Britain’s tech sector is set to see record investment of more than $40 billion in 2021. Of that amount, black founders saw their share of investments by value rise to a high of 1.13% as companies’ diversity and inclusion efforts skyrocketed as a result The Black Lives Matter movement. According to Extend Ventures, in 2023 the share of investments represented by the group decreased to 0.95%.
Aisha Ofori, Founder and CEO of Propelle.
Propeli
Ofori was convinced that she had “checked the box” for what venture capitalists expect from founders.
“Through the grapevine, talking to people behind closed doors, I was told that a few black women were given a chance. They raised venture capital funding. It failed and went bad and that is why some of these VC firms are not willing to take any more risk on us,” Ofori explained.
According to Extend Ventures, between 2019 and 2023, only 13 black women raised venture funding, compared to more than 3,700 white men.
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 community-based approach that includes support from family and friends.
The battle for funding
CNBC spoke with several founders and venture capitalists who noted that black business leaders often face systemic challenges, from racial stereotypes to a general lack of diversity in the sector.
Sarah Werner, who co-founded the property management company Husmus with her Swedish husband Matthias Werner, said some venture capital firms subscribe to quotas and turn away black founders when they reach their threshold. Werner said other venture capital firms will pit black founders against each other to compete for the limited funding they are allocated.
“You’re pitting people against people who are already in dire straits. . . . To pit black people against each other, to fight for the one seat in your portfolio that goes to a person of color, that’s ridiculous,” she said.
Werner, who said she is the face of Husmus, told CNBC that her common name has often opened doors for her because people aren’t immediately aware of her skin color. She also said that using her white husband’s email address allowed her to secure meetings with high-profile investors.
Carl Loca, founder and managing partner of Black Seed, a venture capital fund for black-led startups, told CNBC that more diversity at the leadership level of venture capital firms is needed to overcome these prejudices.
“If the ICs (investment committees) reflect a more diverse lens, then there can be a more comprehensive look at the proposals that are evaluated and decisions are made,” Lokko said. “So, yes, more diversity, but more diversity that’s actually in the sea of decisions about where the money goes.”
Friends and family
At the end of October, thousands of students, venture capitalists, CEOs and diversity, equity and inclusion (DEI) experts gathered in North London for the fifth edition of Black Tech Fest, a festival organized by ex-Googler Ashley Ainslie and Silicon Valley CTO Dion McKenzie.
A recurring theme at this year’s Black Tech Fest was the lack of available data showing the share of funding and support received by ethnic minority founders. Mackenzie called Europe a “data desert”.
In response to the lack of data and representation in their industry, McKenzie and Ainsley created Colorintech to create a new community for people of color. Since launching, their program’s underrepresented founders have raised more than $50 million and the community has grown to more than 60,000 people, they say.
“We wanted to bring attention and give a platform to people in the industry who are underrepresented,” McKenzie said.
They work with some of the biggest names in the sector, such as the owner of Facebook MetaGoogle, PwC and JPMorgan.
Google also supported Propelle’s Ofori and Husmus’s Wernér by offering funding through its own Google’s Black Founders Fund for Startups. Ofori, who received an initial investment of $100,000, said Google’s entry for startups was a “catalyst” for the money to start flowing.
Even as people who previously rejected her became interested, Ofori decided to focus on using her community and network to move forward.
Black Tech Fest 2024
BTF by Colorintech
She also reached out to some of her former colleagues at Goldman and brought them prominent investors, including female entrepreneurs. One of Propelle’s investors is former Goldman partner Stefan Bollinger, the current CEO of Julius Baer.
Werner called the backing a “friends and family” round, a type of early-stage fundraising where founders ask friends and family to invest in their business. She said her first check for her venture was from a university friend who offered her £10,000, prompting her to reach out to other acquaintances.
“These are people who know you. You were in the trenches with them. You pulled an all-nighter with them in the library. They know you and they trust you, and they gave you money out of their own pocket. and there’s nothing more humiliating than that, to be honest,” she told CNBC.
A world away from the US
A surge in diversity and inclusion programs in 2020 when the murder happened George Floyd It led to protests and race riots, and failed to inspire long-term investment in the black community — a failure that is hurting the tech sector, according to Mackenzie and Ainslie of Colorintech.
If we think about the whole concept of developing Britain and increasing the productivity of the country, we cannot do this by increasing the disparity in productivity between certain social groups, especially when those social groups … may be minorities, but they are again not insignificant.
Ashley Ainslie
Colorintech
A more diverse workforce leads to “better products, better teams and ultimately more revenue,” McKenzie said, adding that more inclusive employers allow firms to secure “the best of talent.”
“If we think about the whole concept of growing Britain and making ourselves a more productive country, we can’t do that by increasing the disparity in productivity between certain social groups,” Ainslie said, stressing that those social groups could be minorities. , they are not “insignificant”.
Four years after the Black Lives Matter moment, the sentiment around diversity efforts has changed. Several companies including McDonald’s, Google, Ford, Law and Walmart to have reduced diversity efforts in the US for reasons ranging from cost-cutting to political pressure. Donald Trump’s new White House administration has raised concerns about DEI’s future, given the president-elect’s proposals to eliminate federally funded diversity programs.
Ashley Ainsley, ex-Googler, and Dion McKenzie, CTO of Silicon Valley
BTF by Colorintech
In the UK, the Labor Party promised before the election to break down barriers to opportunity by introducing Racial Equality Act offers a stark contrast to the state’s outlook. While the rollback of corporate DEI programs may be less common in Britain, the value of investments represented by black founders in the country has yet to exceed 1%, as it did in 2021 and 2022, according to Extend Ventures.
Ainslie and McKenzie said the term DEI has become “politicized” and “weaponized” to silence efforts by organizations like Colorintech.
“For better or worse, DEI will certainly be a focal point during the next administration. We’ve heard a lot of anti-DEI rhetoric in the run-up to the election and proposed actions after taking office, but ultimately business leaders will need to make a choice about whether they, their employees, and shareholders see the value of diversity, inclusion, and equity, or the best alternative for value creation and engagement. top talent,” McKenzie said.
