Former Goldman Sachs CEO Ayesha Ofori was convinced that investors would be interested in funding the start-up of her investment platform – and then a wall of rejection followed.
Some of the venture capitalists who cold-bloodedly accepted the Oforis female-focused financial investment platform, Propellein the end he turned her down, citing lack of experience as the reason. Ofori notes her experience at Morgan Stanley, Goldman Sachs and her MBA from London Business School.
“Fundraising is phenomenally difficult,” Ofori told CNBC. “I try not to think about it, because it annoys you… It’s like your gender and the color of your skin is the reason why you’re not progressing as fast as other people.”
Ofori was one of a small number of black founders in the UK who eventually secured funding for their business. But overall, black founders received only 0.23% of venture funds in 2018, according to data from Expand your ventures. That market share for the minority group has increased slightly since then.
Britain’s tech sector has seen record investment levels of over $40 billion in 2021. Of that amount, black founders saw their share of investment by value rise to a high 1.13%, as companies’ diversity and inclusion efforts soared after Black Lives Matter movement. The value of the 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.
Propelled
Ofori was confident that she had “checked every box” in terms of what VCs are looking for in founders.
“Through the grapevine, talking to people behind closed doors, I was told that a few black women got a chance. They did raise VC funds. It failed and it went badly, so some of those VC firms aren’t willing to take a chance on us anymore “, Ofori explained.
According to Extend Ventures, only 13 black women raised venture funding between 2019 and 2023, compared to more than 3,700 white men.
Like other black founders in the UK, Ofori is trying to buck the downward trend in funding by targeting high-profile investors and adopting a more community-focused approach that includes support from family and friends.
The battle for funding
CNBC spoke with several founders and VCs who noted that black business leaders often face systemic challenges ranging from racial stereotypes to an overall lack of diversity in the sector.
Sarah Wernér, who co-founded asset management firm Husmus with her Swedish husband Mattias Wernér, said some VC firms subscribe to quotas and reject black founders once they reach their threshold. Other VC firms will pit black founders against each other to compete for the limited funds allocated to them, Wernér said.
“You’re pitting people who are already in trouble against each other … To pit black people against each other, to fight for the one seat in your portfolio that’s been given to one color is ridiculous,” she said.
Wernér, who said she is the face of Husmus, told CNBC that her generic-sounding 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.
Karl Lokko, founder and managing partner of Black Seed, a VC fund for black-led startups, told CNBC that more diversity is needed at the leadership level of VC firms to overcome these biases.
“If the ICs [investment committees] reflect a more diverse lens, then there can be a more well-rounded consideration of the proposals being evaluated and decided upon,” Lokko said. “So, yes, more diversity, but more diversity that’s actually in the sea of decision-making where the money is going to 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 organized by ex-Googler Ashleigh Ainsley and Silicon Valley tech executive Dion McKenzie.
A recurring theme at this year’s Black Tech Fest was the lack of available data on the share of funding and support received by ethnic 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 in their program have raised more than $50 million in funding, and the community has grown to more than 60,000 people.
“We wanted to shine in the spotlight 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 TargetGoogle, PwC and JPMorgan.
Google also backed Propelle’s Ofori and Husmus’ Wernér, offering funding through its own Google for Startups Black Founders Fund. Ofori, who received an initial investment amount of $100,000, said getting into Google for Startups was a “catalyst” for the money to start flowing.
Even as people who previously rejected her took interest, Ofori decided to focus on using her own 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 won over prominent investors, including female entrepreneurs. One of Propelle’s investors is former Goldman partner Stefan Bollinger, current CEO of Julius Baer.
Wernér called this support a “friends and family” circle — 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’ve been in the trenches with them. You’ve spent all night in the library with them. They know you and they trust you, they’ve given you money out of their own pocket and to be honest, there’s nothing more humbling than that.” she told CNBC.
A world away from the US
The surge in diversity and inclusion programs in 2020 when it’s murder George Floyd led to protests and racial unrest, has not inspired long-term investment in the black community — a shortcoming that is hurting the tech sector, according to Colorintech’s McKenzie and Ainsley.
If we’re thinking about the whole concept of growing Britain and creating a more productive country, then we can’t do that by widening the productivity gap between certain social groups, especially when those social groups are… maybe minorities, but they’re not insignificant.
Ashleigh Ainsley
Colorintech
A more diverse workforce leads to “better products, better teams and ultimately more revenue,” McKenzie said, adding that more inclusive employers allow companies to secure “the best talent.”
“If we’re thinking about the whole concept of growing Britain and creating a more productive country, then we can’t do that by widening the productivity gap between certain social groups,” Ainsley said, stressing that those social groups could be minorities. , are not “insignificant”.
Four years after the Black Lives Matter Moment, the mood around diversity efforts has shifted. Several companies including McDonald’s, Google, Ford, Lowe’s and Walmart have reduced diversity efforts in the US for reasons ranging from cost cutting to political pressures. Donald Trump’s new White House administration has raised concerns about DEI’s future, given the president-elect’s proposals to end federally funded diversity programs.
Ashleigh Ainsley, former Google employee and Dion McKenzie, technical executive in Silicon Valley
BTF by Colorintech
In the UK, the Labor Party’s election promise to break down barriers to opportunity by introducing Racial Equality Act offers a stark contrast to the outlook in the state. While the rollback of corporate DEI programs may be less prevalent in 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 say DEI has become “politicized” and “weaponized” as a term as a way to silence the efforts of organizations such as Colorintech.
“For better or worse, DEI is sure to 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 intended actions once we take office, but ultimately business leaders will have to make a choice about whether they, their employees and shareholders the value of diversity, inclusion and equity or is the alternative better for creating value and attracting the best talent,” said McKenzie.
