Where are all the Black Venture Capitalists?

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Black British history IS British history, and with that in mind, it falls to all of us to create spaces where everyone can contribute and be really heard.

This is no less true in our industry where successful venture-backed startups have a very specific diversity problem of their own. “Data from 2018 showed that only 3% of venture capital investors are ethnic minorities. Most venture firms don’t track their data-publicly or privately-so it’s difficult to know how accurate these numbers are today, and if they’re getting better or worse” (BLCK VC). 

According to CB Insights, the statistics are even more astonishing regarding investors, where less than 0.5 percent are Black (Black Economics). With very little Black representation in decision-making roles at VC funds, it is worrying that this lack of diversity at VC level could have an adverse effect on Black Founders.

People invest in what they know, in what they have experience in, or what they can see a market for. That’s not to say people can’t learn about other cultures, but it is no surprise that a lack of VC’s with a diversity of experiences would lead to a diverse pool of entrepreneurs being passed over. If we don’t make a change, we are potentially perpetuating the cycle of disadvantage and missed opportunity for Black entrepreneurs and Black-owned startups that we have seen throughout history.

Who’s talking about this?

Since 2015, Andy Davis, Venture Partner at Backstage Capital, has been bringing together Black people working in VC. He runs an informal community called 10×10 for around 120 Black founders and investors, coaching members on how to pitch to VC’s.

In an interview with Swifted, Andy says, “there’s an education piece on both sides. It’s not simply a case that VCs could do with learning more about markets they don’t have personal experience of; entrepreneurs also need to learn how to speak VCs’ language.”

This conversation erupted in 2019 when almost all of the UK’s black VCs gathered in a small cafe in Soho, London – all 14 were able to fit in the corner of the establishment. As far as this group was aware, there were fewer than 20 people working in decision-making roles at venture capital funds in the UK at the time. This does not include angel investors or those working in private equity.

“In the UK as a whole, meanwhile, there are 1,703 people currently working at decision-making levels in VC, according to data company Beauhurst (which does not collect data on the ethnicity of people who work in VC firms). This would mean that fewer than 1% of decision-making VCs are Black.” (Sifted)

What can the industry do?

Firstly, acknowledging there is a problem is key. A lack of racial diversity amongst VC’s is a problem like any other – much like a lack of diversity in commercial experience can be a problem for startups. According to Diversity VC only 8% of managing partners in the UK have any startup experience meaning entrepreneurs may not get the hands-on commercial advice they may need or expect from VCs.

Seek out and celebrate your Black colleagues and those who are occupying space in the tech industry as a minority. Ask yourself if you are seeing enough diversity in the channels you receive your news about your industry and sign up to a newsletter which will give you a broader view. See Black Economics and Business Newsletter.

Black Economics took the time to celebrate Black entrepreneurs in tech and highlight their trailblazing achievements. Read the full article here and learn about some of the faces who are striving to improve diversity and inclusion in tech, such as Charles Hudson, Troy Carter, Kathryn Finney, Marlon C. Nichols , Brian Dixon and Lo Toney to name a few.

We are also aware that becoming a venture capitalist is no small feat. It is common that aspiring VC’s will need upfront capital to invest in startups or go through a sort of finance apprenticeship. In any case, the most common routes require time, networking and capital. To encourage diversity in VC’s there needs to be more education on how to get in, even if you are from a disadvantaged background. Check out TechCrunch post on How To Be A VC Without Any Capital.

There are also platforms you can get involved with to help increase the diversity of VCs. BLCK VC is a non-profit with the goal of doubling the representation of Black investors by 2024. Formed in 2018, it aims to empower and support Black investors, while increasing diversity in venture capital.

You can find out more about what BLCK VC are doing to change the stats and donate here.

What about us?

At SIA our mission is to help startups and scaleups in the B2B tech industry beat the staggering fail rate, and that means we have to get real about the discrepancies and hurdles that make it even harder for people to succeed. Sometimes these hurdles are inextricably linked to culture, politics and sometimes prejudice. We are still on the journey to finding experts to work with who have a diversity of thought, experiences and cultures, and can serve our customer base in the way they deserve.