Black business founders have expressed their dismay with the British and European venture capital industry for what they say is its lack of action in tackling inequality in investment and hiring.
In an open letter to investors, black entrepreneurs said they felt the industry in Europe had not said enough about how it will invest in and recruit more black people even as the Black Lives Matter movement gained traction in other areas.
They said they had been “very disappointed” with the industry’s reaction to BLM: “While companies and industries across the UK have recognised the prevalence of systemic racism and issued calls for reform, the venture capitalist industry has mostly been silent,” they wrote.
According to research from the venture capital firm Atomico last year, founders who identified as black, African or Caribbean secured 0.5 per cent of external capital from European investors.
The letter warned that a homogeneous group of white men has been given “licence to shape the future of innovation”. The signatories include leading black entrepreneurs such as Sharmadean Reid, founder of Beautystack.
Kike Oniwinde, the co-founder of BYP Network, a business that links up young black professionals and employers, helped organise the letter. She said the venture industry had a “duty to invest in black businesses”.
Another of the letter’s organisers, Rich Serunjogi, founder of Business Score, which helps online businesses raise finance, warned European funds were lagging behind their counterparts in the United States on the issue.
“Just like black actors in the film industry, black entrepreneurs feel like you have to go to America to be taken seriously back in the UK. It’s about time European funds recognised the Black talent they have on their doorstep.”
Rich Robinson, chief executive of Robin AI, a start-up developing technology for law firms, and Andy Davis, founder of 10x10, an investment firm backing black founders, also played a key role in the intervention.
They called for firms to invest 1 per cent of their funds in an early stage investment syndicate for black entrepreneurs, record and publish how many black founders they meet each month and what stage in the investment process they reach and engage with established black investment networks for referrals.
They also asked investors to publish details of how many black employees work within their funds and portfolio companies and establish how they can improve those figures and appoint black staff to investment committees. The British Private Equity & Venture Capital Association said it had acknowledged that BLM had been a reminder “that the industry still has a long way to go to increase the representation and inclusion of people from a black and ethnic minority background, especially in senior roles”.
“At a portfolio company level, diversity is not always present either.”
Juliet Bailin of Diversity VC, an organisation trying to tackle inequality in the industry, said: “VCs do not go out of our way to engage with new - including Black - communities of entrepreneurs. This is lazy, ignorant behaviour. We have a responsibility, not only to these founders but also to the health and performance of our funds, to expand our networks.”
This article was written by James Hurley from The Times