Black entrepreneurs in the United Kingdom are also feeling the effects of venture’s cold year.
According to a recent Extend Ventures analysis, black entrepreneurs in the United Kingdom have raised just 0.95% of total venture financing allotted in the nation this year (or $165 million out of about $17.3 billion). This would place 2023 behind 2022, when such founders received 1.02% ($316 million out of $30.88 billion), and 2021, when black founders received 1.13% ($454 million out of $40.03 billion) of total venture capital in the nation.
Since 2020, the year George Floyd was killed, there has definitely been a constant deterioration, generating worldwide support and pressure to help the black community. The recent venture slump is most likely to blame for the declining trend in the percentage of investment distributed to black entrepreneurs.
According to George Windsor, a data and research specialist who worked on the paper, black people make up 2.5% of the United Kingdom’s population, and fair representation in the venture ecosystem would imply at least 2.5% of capital flowing to black-led enterprises.
Still, 0.95% is an improvement over the previous decade, indicating that progress is being made.
In the United Kingdom, for example, black entrepreneurs raised just 0.28% of venture capital in 2019, 0.23% in 2018, and 0.38% in 2017. According to Extend Ventures, between 2009 and 2019, just 38 black entrepreneurs were able to raise any venture capital in the nation; that figure has since risen to 80.
Even black women are improving. Extend discovered that just one black woman raised $1 million or more in venture investment between 2009 and 2019; between 2019 and 2023, eight women did so.
Windsor attributes the advancement to a variety of causes, including “heightened awareness of racism, discrimination, and inequality raised by the Black Lives Matter Movement and the murder of George Floyd.”
It also helps that the United Kingdom has witnessed less reaction against diversity, fairness, and inclusion programs than the United States, according to Tom Adeyoola, co-founder of Extend.
“The UK prefers slow and steady reform to knee-jerk reactions, which can be performative and lack substance.” “Here, the desire for change is deep and focused on systemic action,” he added. “However, anti-DEI rhetoric can be found in discussions about removing these roles from the civil service as well as in newspaper headlines. “I’m simply not sure it has piqued the public’s interest, particularly while a report after research confirms how much structural biases cost the economy in missed growth.”
According to Extend research, there has been a 100% growth in people from minority backgrounds becoming investors; however, women of color continue to face barriers to entry.
Earlier this year, the Treasury Select Committee in the United Kingdom highlighted the paucity of investment in minorities and women in technology and considered measures to boost it.
Adeyola thinks it will need fresh initiatives as well as doubling down on current ones to keep the momentum rolling. “The data shows that it will be hugely important to track cohorts and catch the companies that have been funded at the early stage and beyond,” he went on to say. “We need to ensure that the right measures are in place at the levels that follow companies through.”
