Former Goldman Sachs executive Ayesha Ofori was confident that investors would be keen to fund her investment platform startup — then came the wall of rejections.
Some of the venture capitalists who gave the cold shoulder to Ofori’s female-focused financial investment platform, Propelle, ultimately rejected her, citing her lack of experience. Ofori notes her background 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 gets you down… 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 U.K. who eventually secured funding for their business. But Black founders overall received just 0.23% of venture funds in 2018, according to data from Extend Ventures. That share of the market for the minority group has increased little since then.
Britain’s tech sector saw record investment levels of over $40 billion in 2021. Of that amount, Black founders saw their proportion of investment by value rise to a high of 1.13%, as diversity and inclusion efforts by firms soared in the wake of the Black Lives Matter movement. Investment value represented by the group has since dropped to 0.95% in 2023, per the Extend Ventures data.
Ayesha Ofori, founder and CEO of Propelle.
Propelle
Ofori was convinced that she “ticked every box” regarding what VCs were looking for from founders.
“Through the grapevine, speaking to people behind closed doors, I’ve been told that a few Black women were given the chance. They did raise VC funding. It failed and went badly, and so some of these particular VC firms aren’t prepared to take the risk on us anymore,” Ofori explained.
Just 13 Black women raised venture funding between 2019 and 2023, compared with over 3,700 white men, according to Extend Ventures.
Like other Black founders in the U.K., Ofori is looking to buck the trend of declines in funding by targeting high-profile investors and adopting a more community-focused approach that includes the support of family and friends.
A battle for funding
CNBC spoke to 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 property management company Husmus with her Swedish husband Mattias Wernér, said some VC firms subscribe to quotas and turn down Black founders once they’ve hit their threshold. Other VC companies will pit Black founders against each other to compete for the limited funding allocated to them, Wernér said.
“You’re putting people who are already in hardship against each other… Pitting Black people against each other, fighting for the one space on your portfolio that is allocated for a person of 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 are not immediately aware of the color of her skin. She also said that using her white husband’s email address enabled her to secure meetings with high-profile investors.
Karl Lokko, founder and managing partner of Black Seed, a VC fund for startups led by Black people, told CNBC that more diversity at the leadership level of VC firms is needed to overcome these prejudices.
“If the ICs [investment committees] reflect more of a diverse lens, then there can be a more well-rounded consideration of the propositions being evaluated and decided upon,” Lokko said. “So yes, more diversity, but more diversity that’s actually in the sea of decision-making as far as where money will be allocated.”
Friends and family
In late October, thousands of students, VCs, CEOs and Diversity, Equity, and Inclusion (DEI) experts gathered in North London for the fifth edition of Black Tech Fest — a festival organized by former Google employee Ashleigh Ainsley and Silicon Valley tech exec Dion McKenzie.
A recurring topic at this year’s Black Tech Fest was the lack of data available charting the proportion of funding and support received by ethnic minority founders. McKenzie described Europe as a “desert in terms of data.”
In response to the lack of data and representation in their industry, McKenzie and Ainsley set up Colorintech to foster a new community for people of color. Since launching, they say that underrepresented founders on their program have raised more than $50 million in funds, and the community has grown to more than 60,000 people.
“We wanted to shine a spotlight and give a platform to folks in the industry who are underrepresented,” McKenzie said.
They’ve partnered with some of the biggest names in the sector, such as Facebook-owner Meta, Google, PwC and JPMorgan.
Google also supported Propelle’s Ofori and Husmus’ Wernér, offering funding via its Google for Startups Black Founders Fund. Ofori, who received an initial investment of $100,000, said that getting into Google for Startups was a “catalyst” for money to start coming in.
Even when the people who previously rejected her became interested, Ofori decided to focus on tapping into her own community and network to move forward.
Black Tech Fest 2024
BTF by Colorintech
She also approached some of her former colleagues at Goldman and got high-profile investors including female entrepreneurs on board. One of Propelle’s investors is former Goldman partner Stefan Bollinger, the current CEO of Julius Baer.
Wernér referred to this support as the “friends and family” round — a type of early-stage fundraising when founders ask friends and family to invest in their business. She said her first check toward her venture was from a university friend who offered her £10,000, which encouraged her to reach out to other acquaintances.
“These are the people that know you. You’ve been in the trenches with them. You’ve pulled all-nighters in the library with them. They know you and they trust you, and they’ve given you money from their pocket and there’s nothing more humbling than that to be honest,” she told CNBC.
A world away from the U.S.
A spike in diversity and inclusion programs in 2020 when the murder of George Floyd led to protests and racial unrest has not inspired long-term investment in the Black community — a failing that comes at the detriment of the tech sector, according to Colorintech’s McKenzie and Ainsley.
If we think about the whole concept of growing Britain and making ourselves a more productive country, then we can’t do that by increasing disparities of productivity across particular social groups, especially when these social groups … might be 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 enable firms to secure the “best of the talent.”
“If we think about the whole concept of growing Britain and making ourselves a more productive country, then we can’t do that by increasing disparities of productivity across particular social groups,” Ainsley said, stressing that, while these social groups might be minorities, they’re not “insignificant.”
Four years after the Black Lives Matter Moment, the sentiment around diversity efforts has changed. Several companies including McDonald’s, Google, Ford, Lowe’s and Walmart have scaled back diversity efforts in the U.S. for reasons ranging from cost-cutting to political pressures. Donald Trump’s incoming White House administration has sparked concerns about the future of DEI, given the president-elect’s proposals to cancel federally funded diversity programs.
Ashleigh Ainsley, ex-Googler and Dion McKenzie, Silicon Valley tech exec
BTF by Colorintech
In the U.K. the Labour Party’s pre-election pledge to break down barriers to opportunity with the introduction of a Race Equality Act offers a stark contrast to stateside prospects. While the rollback of corporate DEI programs may be less prevalent in Britain, investment value represented by Black founders in the country has yet to surpass 1% as it did in 2021 and 2022, according to Extend Ventures.
Ainsley and McKenzie said DEI has become “politicized” and “weaponized” as a way to silence the efforts of organizations such as Colorintech.
“For good or bad, DEI will certainly be a focal point during the next administration. We’ve heard a lot of anti-DEI rhetoric in the run-up of the elections and intended actions once in office, but ultimately business leaders will need to make a choice on if they, their employees, and shareholders see the value of being diverse, inclusive and equitable or if the alternative is better for value creation and attracting the best talent,” McKenzie said.