I’ve been thinking about how to better support black founders, with particular focus on black women. This is core to Ada Venture’s proposition: inclusion is at the heart of everything we do. We believe it leads to better returns.
According to research from Ebay UK, black UK women are more likely than other communities to start a side hustle or business. The US is no different; the Harvard Business Review noted that 17% of black women are in the process of starting or running new businesses (compared to 15% of white men). But this lead is temporary, according to HBR: “Only 3% of black women are running mature businesses.”
Something is wrong.
Black women routinely face the highest barriers when it comes to running a business. They deal with prejudice, lack of access to networks that promote growth and a lack of representation in the industry. Perhaps the biggest difficulty black women face is accessing capital. This crucially is a problem that the industry can solve.
These women also present a huge opportunity. There’s exceptional talent out there. I only need to think of the women in the portfolio including Simi Lindgren, founder of the beauty platform Yuty, Kiemu Salmon, founder of the e-commerce beauty brand Unhidden Beauty, or Amber Hill, founder of R.Grid, a start-up that streamlines medical research processes. Kenya Hunt, Elle magazine’s first black women to edit the title and a very inspirational figure, will be headlining AdaCon this year.
It is also deeply personal. My mother and grandmother played an outsized role in making me who I am. I have seen firsthand the resilience, determination and dynamism of black women and I have also witnessed the factors that have held them back.
One of our initiatives has been a series of events called Bridging the Gap — I wanted to let you into how it came about and how it is going to help us find and fund even more extraordinary talent building breakthrough ideas.
The beginnings of Bridging the Gap
In May 2022, Ada co-founding partner Check announced on Twitter that she was part of a new Government Task force looking to make it easier for female founders to access capital to scale their businesses. That tweet, as innocuous as it seemed, started a very interesting conversation.
The entrepreneur André Skepple tweeted back: “What about black founders?” And he knows what he’s talking about; he’s seen firsthand the difficulties faced by black founders raising capital. André is the CEO and founder of FullSpektrum Ltd, an ed-tech start-up that looks at improving outcomes for children with special educational needs and disabilities. He tweeted the hard truth: “If we don’t have an honest conversation about real solutions to the problem, then you’re sadly part of the problem.”
The first Bridging the Gap, held on 27th October 2022 at the black-owned Mango Studios in Finsbury Park, was a way to start the conversation. André joined us alongside early-stage investor Chenelle Ansah and Head of Marketing & Business at Extend Ventures Abi Mohamed. We discussed the very real barriers that black founders face. We used Chatham House Rule so the conversation would be as frank as possible.
What we discussed
Funding Models and whether they work for black founders.
Bias & Higher Bars set for black founders as they are seen as a riskier bet by the industry.
Networks and the fact that black founders often lack the option to rely on friends and family for capital.
Homogenous Investment Firms: Investment Committees often lack diversity even though there’s diverse talent at junior levels in VC firms.
Metrics and if we should chase them: Should we be working towards an ‘ideal’ % of VC funding going towards black founders? Or should we be focusing on systemic change?
Responsibility for Driving Change and how black-led organisations or black employees are often tasked with this.
The limits of conversation
The event was a much-needed opportunity for the funds to hear the frustration felt by many black founders in the ecosystem. That kind of discussion is important but only if it leads to action.
Following the event, we held critical friends conversations with several people in our network, including Precious Oyelade, Head of Strategy at Ventures 54 and Andy Ayim, the creator of The Angel Investing School. We are grateful for their insight.
Julia Rabin, Head of Growth at Diversity VC, and I decided it was time for round two. It took place on 24th May 2023 and was kindly hosted by Techspace. This time we specifically focused on one of the most under-served communities of all. If we can support black women entrepreneurs, then we have the tools to drive positive change across the whole system.
The reckoning: Can we be part of the change?
We decided to focus on three key barriers identified above: Funding Models, Bias & Higher Expectations from Investors and Networks. Again, it was under Chatham House Rule.
Discussion centred around better supporting black women to access funding, VC or otherwise, and tailoring specific funding models to them. We talked about the bias some investors might have and their lack of experience in supporting black women entrepreneurs. But we also focused on flipping the conversation and focusing on the opportunity these entrepreneurs represent. And finally, we discussed the power of building a network at the early-stages of a business, and how we can better support women to make that happen.
We came away with some tangible action points:
Setting a charter all funds can use to provide clear and transparent feedback to black women founders.
VCs commit to speaking to three black women founders a month to broaden networks.
VCs commit to providing educational content on how any founder can pitch to them, and commit to asking founders upfront if they want to raise VC funding and openly sharing other funding models available.
I decided to work in partnership with Foundervine on Barclay’s Black Venture Growth Programme by pledging our time and network to a programme focused on providing rocket fuel to support the next UK black-led unicorn. We’ll be supporting this year’s cohort with a variety of measures. These will include running a roundtable with other funds including Cornerstone Partners, Octopus Ventures and Ascension along with black founders from our portfolio. Our soon-to-be announced investor-in-residence will be supporting some of the cohort with investment readiness preparation.
How can we keep the support for black entrepreneurs front of mind?
For me, this is a moment for reflection. As the Black Lives Matter movement picked up momentum in 2020, optimism for change seemed to dominate. What were my feelings? Cautious anxiety might be a better way of putting it. I could see investors suddenly realise that there was a problem and they needed to be part of the solution. The US is where this kind of change happens first and I’ve been monitoring the situation closely. In 2021, Crunchbase reported that entrepreneurs of colour experienced a record-breaking year of VC funding in the US (black founders raised $4.2bn out of the $309bn US venture dollars).
But unfortunately, there are signs already that the industry is flagging in its efforts. Black Lives Matter might be less than three years old but support for black founders has already plummeted. In 2022, the amount that black founders raised in the US dropped by nearly half — to an estimated $2.2bn out of the total $215.9bn in US venture capital money.
The picture looks even grimmer for women of colour. They raised less than one percent of the total venture capital spent in the US in 2022. It means the work of firms like the Fearless Fund continues to be vital. But they are now being attacked. A conservative outfit is suing the Fearless Fund for breaching Section 1981 of the Civil Rights Act of 1866. The case is spurious, and designed to inflame, but it shows how the backlash is gaining force.
I don’t want the same thing to happen in the UK.
The UK started from an even lower base; between 2009 and 2019, TechCrunch reported that around 40 black people received VC funding, equating to less than 0.4% of all funds allocated to founders. Data in the UK is hard to come. The UK may follow US trends. And that’s not altogether a positive prospect.
Inclusion is at the heart of Ada Ventures: every new full-time joiner in the team, me included, has taken the Fearless Futures Design for Inclusion course. It’s a incredibly worthwhile— you develop sophisticated tools and frameworks to take action across a system.
But we can always do more.
And this simply reinforces the need to continue to commit to support black entrepreneurs and black women, in particular.
We’ll be looking to the US to see where things are going — and hope to attend this Black Venture Summit next year. We want other funds to join us. With words, with action, and with finance.
