(Bloomberg) –Black British founders struggle to raise funds from investors in the UK and so seek venture capital in the US, said Sharmadean Reid, Founder of The Stack World, a social network for female entrepreneurs.
“A lot of minority founders in my communities were already looking to America for their next round, which is a very, very bad look for British capital,” Reid said at the Bloomberg Equality Summit on Tuesday.
Key Speakers At The Bloomberg Equality Summit
The underfunding of Black entrepreneurs in the United Kingdom is a persistent problem. In 2020, less than 0.25% of venture capital in the UK went to Black-led businesses and only 38 Black British founders received VC funding between 2009 and 2019, according to an analysis of 2,000 startups by Extend Ventures.
Black founders in the UK are drawn to the US for funding because of the larger number of high-net-worth individuals and venture capitalists among America’s Black population, as well as a less risk-averse environment and potential to scale, Reid added.
As the UK deals with an economic downturn and a squeezed pound, Charmaine Hayden, Founding Partner GOODsoil VC, warned this could also have an outsized impact on Black founders. “Even when people are raising, the down rounds that everyone is facing are going to substantially lean heavier on those Black faces, because of the social nuances people don’t realize,” Hayden said.
© 2022 Bloomberg L.P.