Black Lives Matter. The murder of George Floyd was an abomination, the protest against this gross injustice is admirable. I think it would be hard to find a public organisation or company in the UK that is not either institutionally racist or doing very little to address the outstanding and ongoing discrimination and injustices that Black people face daily in the UK. And it is not acceptable. Something needs to be done. People need to stand up. White middle aged males like me need to recognise our privileges and do something to address the inequalities and inequities they cause.
This should not need saying. But it does. I should have said it 10 days ago when the video of gruesome slow execution of George Floyd went global and when the Black citizens of the UK and their allies (the young and those who are good, enlightened, knowledgeable) protested and declared that discrimination, racism and injustice also happen to minorities here in the UK and relevant to what I specifically do, happen to ambitious Black and BAME founders of tech startups in the UK. By keeping quiet I let the organisation I lead, Capital Enterprise, and especially my employees and partners, down. I feel particularly bad for providing no lead on this issue, by keeping quiet, because most of my employees and partners are working their socks off trying to address the discrimination and inequities that make it far, far too hard for black and female founders to make it in the London Startup scene.
Almost 2 years ago we at Capital Enterprise consulted, then developed a proposal and then secured funding from initially JP Morgan and then later the GLA and the South London Innovation Corridor, which enabled Capital Enterprise to launch One Tech, a series of measures and initiatives to increase the opportunities for tech entrepreneurship for those the ecosystem have too long excluded, and to address the additional barriers including overt discrimination and affinity biases that make it much more difficult for female, Black and BAME founders to get the support and funding they need. More than ably led by my colleagues Alison Partridge and Emma Obanye, Capital Enterprise has through One Tech, provided mentor sessions, masterclasses and entrepreneurship internships to 100s of budding Black, BAME and female entrepreneurs. We have also financed the amazing Foundervine and YSYS to run Founder Weekends and pre-accelerator programmes for young people and overlooked communities in South London; We have partnered with Diversity VC on their fantastic research, community and advocacy work and are looking forward to the launch of their Diversity Standard later this year. We have supported YSYS to hold a huge amount of community events for BAME founders as well as delivering Diversity Action Plans to 12 of London’s top accelerators and, through UKBlackTech are raising awareness of opportunities to start a tech or digital company in South London. We have worked with Fearless Futures to deliver Diversity and Inclusion training to 16 senior tech leaders.
We intend to keep raising money and developing programmes for the One Tech but it is not enough. We need to do more. As a member of my staff commented this week, “I do not see what (outside One Tech) Capital Enterprise is doing to support BAME Founders”. Hearing that comment stung but it is nevertheless valid. So this week I will commit Capital Enterprise not only to publish the ethnicity and gender of all the beneficiaries of our programmes but also to set targets and devise actionable measures to ensure that the following programmes are as open, unbiased and as representative as possible, as they need to be, as they should be. These programmes include:
- Idea London Tech Incubator that Capital Enterprise runs with UCL and EDF Energy
- P4 Precision Medicine Accelerator which we run with UCL, Barclay’s and UCLH
- CAP – AI – Support for AI First startups
- Machine learning Academy
- Start Up Resilience Programme.
Capital Enterprise will also engage external expertise to expose all our cultural and discriminatory biases in all that we do and take action to make us fit for the whole community of startups we serve. We will also talk to our sponsors and partners like Barclays Eagle Labs and the Digital Catapult to see if they can follow suit and we will fund senior decision makers in the London Tech Sector to attend small group diversity and inclusion workshops. I attended a workshop last year. It seems I am a slow learner so obviously, I for one need, a refresher. Hopefully other CEO’s in the UK Startup support ecosystem feel the same.
The truth is that outside One Tech, Capital Enterprise is not as important to the London Tech Startup ecosystem as we once were. 18 months ago we were using EU funding to co-fund 12 tech accelerators. Now, due to the decision of the GLA and LEAP that funding is no more, many accelerators have now gone from London (goodbye Startup Bootcamp and Ignite) whilst others that remain we obviously have less influence on. 18 Months ago we helped manage two seed stage investment funds- London Co-Investment Fund and AI Seed- now both have deployed their cash and are investing in new deals no more.
I think all three initiatives are greatly missed by founders of tech startups in London. If the funding is available from either the Mayor of London or central government and their agencies then we will try to resurrect them and if we do, we will make them much more focused on supporting BAME and under-represented founders.
For instance we are backing (and if successful supporting the running of) a new co-fund that Funding London is trying to get the Mayor of London to fund from unused funding earmarked to stimulate private investment in the London economy. The fund will only be £10m but it will be focused on supporting up to 100 tech startups not eligible for the Future Fund (for instance match funding £ for £ private angel investment in startups who have not previously raised £250K) and will focus to fund teams led by female and BAME founders. Presently the approval and launch of the scheme is stuck in a dispute over funding between the GLA and the Treasury. Hopefully, in light of recent events the Mayor Sadiq Khan will make funding this fund a priority.
And priorities matter. For the regional governments of the UK including London, the focus of the economic recovery will be on getting the population back to spending money in the real world in local shops and on local services. For our national government the priority looks to remain on getting “Brexit done” and on investments and initiatives to “level up” economic activity in the regions outside London. That’s why the British Business Bank will continue to invest more money into Angel Co-Funds and new big VC initiatives that exclusively fund startups in the regions and exclude backing new funds for startups in London (coincidentally where most BAME founders are found).
So we need new priorities and new initiatives. I think it is important that they come from BAME founders and the BAME led organisations. I will do my best to be a vocal supporter and a practical ally to my team, my existing partners and new partners. I hope I get the opportunity to be tested. Please call me out when I get it wrong, which I undoubtedly will.
Part 2. “Don’t Wait”
“Black Founders are over mentored and under funded” – Monique Woodward founder of Black Founders.
I fully recommend that everyone needs to check out the BLCK VC “we won’t wait” Youtube video published last week. I know my colleagues at One Tech have always felt that this is a danger that if we do not get more Black and BAME founders of tech startups funded ( or if they are bootstrapping, started) in the UK then our mentoring and support services are in vain. I think this is why there is such a justifiable outcry that VC’s and angel syndicates should do a lot more to fund BAME founded startups. In a capitalist society where so much wealth and opportunity is inherited, where the Matthew Effect means that privileges compound and multiply, then one of the few ways that most ambitious UK BAME citizens can make a big impact through their own efforts, and potentially earn significant life changing wealth, is by founding a business. Especially a classical tech start-up where the returns compound at scale, and the tried and trusted method to get there is to raise investment from business angels and VC’s. In this scenario the VC looks like the gatekeeper to one of the only opportunities open to the non-privileged. The UK VC sector may have much less than 1% of all the Assets Under Management held by the UK financial investing sector but if your focus is wealth building and not wealth preservation then VC’s play a role way more important than the relatively small amount of money they invest in the UK economy. And if the Gatekeepers are white and male (and like most of us racked with affinity biases and a tendency to over pattern match), there is strong evidence these investors will tend to choose to invest in startup teams that look like them or look like the teams they have historically backed before.
One way to overcome this, as “Diversity VC” recommends, is for investors to examine their processes, hiring policies and culture and to honestly and thoroughly route out institutional biases and racism in their firms and to help their portfolio startups to follow suit. They also recommend that white male VC’s put themselves in the shoes of their minority and female colleagues in order for them to try to understand how hard it is to be a visible minority especially if you are on your own in an otherwise white, most likely male world. Something I constantly need to be reminded about.
I think a further step is for VC’s to publish their data as Elliot Robinson a prominent Black VC in the USA and board member of BLCK VC advises all investors- “Pick your diversity measures, publish them and then stick to them”.
At London Co-Investment Fund where Capital Enterprise sourced the majority of deals and carried out the first filter we found, that of the 150 Startups we co-invested in over 4 years to March 19 that 20% had a female founder and 20% had a BAME founder. Better than average for a VC in the UK we think but not good enough.
At AI Seed, which I led for 3 years, we invested pre-seed cheques (through its 3 S/EIS annual funds from the summer of 2017 to March 2020) into 50 AI First Startups. We found that 48% of the portfolio had a BAME founder, 36% had a female founder and 66% had a non-UK national founder. In fact we found that only 6% of our portfolio were all white British ( and they were all located in the UK outside London) as compared to 27% of our portfolio having all non-UK nationals. 80% of our portfolio startups were located in London ( 10% rest of UK and 10% ROW) so it is not surprising our founders ethnicity and nationality is as diverse as London but even so out of 50 AI First Portfolio Startups only 1 has a Black Female CEO, only 2 are teams made up of all BAME founders and I leave it to you to guess which surprising country gave us as many founders (the number is 3) as the number of UK National Black ( as opposed to BAME) founders AI Seed invested in. (A bottle of something good for the first person who emails me the right answer).
A quick side note that all the co-founders and founders we invested in at AI Seed had a degree, most of them with Masters and PhD qualifications in Computer Science related subjects from top universities, and so changing the diversity in the portfolio of deep tech funds such as AI Seed that need to back founders with deep tech expertise, is dependent on universities and their funders doing much more to get Black UK graduates to stay on at a university whether that be ring fencing places or providing scholarships. Something like this from Imperial could be followed by all universities- https://www.imperial.ac.uk/news/198013/new-measures-tackle-racial-inequality-imperial/
So the truth is our diversity and inclusion results from both funds are nothing to shout about. If you are open to receiving unsolicited enquiries, have a good network, put the basic hours in and most importantly predominately back with a seed stage cheque, super bright, super hard working first-time founders, then only the most biggoted London based investor would not end up with a portfolio as diverse as LCIF and AI Seed. I think with a bit more effort, we could have done better. AI Seed GP’s are all White Males and just think what we could have done if we had a BAME investing partner.
So going forward, what is needed is for more Black and BAME founders to get funded and since my area of knowledge and connections is at the pre-seed/ to seed stage, I will focus there. So this is my pledge:
1- I will campaign for the government to finance a new startup convertible loan for first time founders from BAME and disadvantaged backgrounds. I think the biggest practical benefit of coming from a privileged background is having the money to cover your own living expenses for 6-12 months so you can spend this time developing and testing your MVP, to fail and get up and try again, until you have the insights, data, connections, a working product and maybe even pilot customers, before you have to pitch to investors. For historical reasons most UK BAME founders do not come from this privileged background and so are not given this time and if you are Black/BAME and/or female founder facing both societies and our start-up ecosystems biases and prejudices, you need the time that money gives you even more. I would like the small convertible loan ( probably something like £25K per founder) to convert into equity at the first fundraise. After speaker to the founders and entrepreneur facing leads at Zinc, OneTech, EF and Geovation, I think it would be right to make sure that the founders receiving this stipend loan are well coached, mentored and networked, so I would like the startup convertible note to be only for those who attend or are endorsed by a recognised accelerator or entrepreneur education programme. Capital Enterprise alongside COADEC, Founders Factory, Public IO and others were successful in getting the government to back the Future Fund. This might be more difficult to pull off but still worth the effort. We will need to work more with leaders from the UK’s BAME startup community. The Future Fund campaign was led by 4 white males ( 50% from Yorkshire). This one has to be different.
2- I am prepared to back with time and money (Capital Enterprise resources permitting) a BAME led team to set up and run an old fashioned accelerator that takes teams after MVP but before revenue and not only mentors them but actually invests small cheques in them. I recall between 2012- 2016, when as a very small cog in building out the already thriving London Tech startup ecosystem, nearly all the accelerators in the London Tech scene supported and invested small cheques in startups at the MVP/pre-revenue stage and for many startups it was the best opportunity for them to transform them from PT founders with side-bar startups to full time founders with a team and a proper chance of becoming a backable, scalable business. Today most accelerators are either talent accelerators ( like EF and Cognition X), or select teams that are much later in their development cycle. If you’re a BAME team with a great accelerator concept then get in touch. Let’s build an accelerator led by BAME’s for BAME’s.
(* Capital Enterprise as a mission driven not-for-profit has presently secured both public and private funding dedicated to fund the set up and run tech startup accelerators in the North of England- Sheffield City Region- and to a lesser extent to support AI first startups in London. Outside these areas/ sectors we will need to work with the much less money we have from our reserves and then raise fresh money from new sponsors and funders.)
3. I am backing Andy Ayim’s Angel Investing School. I think an initiative like this (that will generate more angels from Black, Asian and Minority Ethnic people investing in startups but also more white investors willing to invest in BAME founded businesses) is really needed now and I fully recommend that you get involved. But I will go one step further, and I will offer to co-fund the organisational and operational costs ( mainly labour and expenses) for someone (preferably from a Black or BAME background) to set up and run an Angel Syndicate dedicated to investing in Black and BAME founded tech startups. If alternatively, like AI Seed, you think it would be better to set up and fundraise for a S/EIS fund, then I will co-fund the set up costs and give the Black/ BAME GP’s my connections with angel investors to help you raise the fund.
So I agree with Monique Woodward that it is important that we both mentor and invest in Black & BAME founders of potentially scalable tech startups. I am offering to ally, share my knowledge, contacts and resources to those from the UK’s BAME community who are best placed to use them.
Finally if anyone of my peers in the London Startup Support Ecosystem including investors would like to join us please do get in touch. If anyone from the Black & BAME community has their own initiatives to help BLACK & BAME founders and you think I can be of help then please do get in touch.