Comment: Diversifying the venture capital ecosystem

Nicole Crentsil explores under-representation in the VC space and explains the barriers that face black women seeking investment.

Nicole Crentsil is the CEO of Black Girl Festival, a platform dedicated to black women, girls and non-binary people.

When I first heard the term ‘venture capital’, I imagined rich white men in suits, Wolf of Wall Street style, exploiting people to get more wealthy. I was totally new to the world of investment and naively thought venture capitalists (VCs) only existed for Americans in Silicon Valley who pumped millions of dollars into big tech companies. 

In 2017, to create the Black Girl Festival – the UK’s first arts and culture festival for black women and girls – we launched a crowdfunding campaign. Within 35 days and with 249 supporters, we raised £7,718 (exceeding our initial target). Our first event was incredibly successful: we had amassed a huge platform and a loyal customer base while achieving the dream product-market fit. Before we knew it, our business was scaling quicker than we had imagined and, naturally, we set our sights on seed investment opportunities, with the ambition to remain 100% black-owned and community focused. 

As a young black woman from a working-class background, I was completely unaware of the magnitude of the barriers that awaited me. According to data company Beauhurst, there are 1,703 people in the UK currently working at decision-making levels in VC. Also, there are roughly 20 black decision-makers in VC roles. This means that fewer than 1% of decision-making VCs are black. To add to this, the Rose Review, a 2019 report on female entrepreneurship commissioned by the Treasury, found that just one in three British entrepreneurs are women and less than 1% of UK venture funding goes to all-female teams. But what if you’re a black woman? Where’s the data on that?

I quickly discovered that there wasn’t just an investment gap when it came to black businesses; there was a knowledge gap, too. Where did business owners go to access information, networks and develop pitches? What was an accelerator? What did series A, B and C mean? I honestly had no idea, nor did I know where to start. With no contacts or networks, my only option was to go it alone, work twice as hard just to get into the room and hope to land a seat at the table.

After three months of research, conversations and joining various networks (including 10x10, an informal community for black business owners and investors), I realised that VC investment maybe wasn’t right for our business. It was the pressure to be part of an ecosystem that didn’t feel inclusive, accessible or fruitful that struck a chord. Instead, I chose to focus on what I did know, which was growing and building my community.

So, how do we combat the knowledge gap for black founders? First, we need to support the communities running diverse educational programmes and events for people in tech, such as YSYS, Foundervine, Hustle Crew and BYP. Then we need to address under-representation by holding VC firms accountable – besides black squares on social media, what are they doing to support, invest in and hire black founders?

It’s exciting to know that several VC firms are investing solely in under-represented founders, such as Backstage Capital, Ada Ventures and Impact X. We’re also seeing a surge in accelerators designed to support black and female founders. Most recently, Google Startups launched a 12-week programme with 12 black founders tackling challenges in healthcare, beauty, manufacturing and advertising.

To see change, we must collectively continue to steer the conversation forward by diversifying not just the decision-makers but the companies that we invest in. To quote Monique Woodard, founding partner of Cake Ventures, VCs need to ‘make the hire, send the wire’ – or my favourite quote from Rihanna at the 2020 NAACP Image Awards: ‘Pull up or shut up.’

This article was first published in Courier Issue 38, December/January 2021. To purchase the issue or become a subscriber, head to our webshop.

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