In the summer of 2020, the death of George Floyd sparked global conversations about race and racial justice. It inspired soul-searching and a chorus of commitments to greater racial diversity from many in the tech industry. Yet, two years on, many of these promises have not seemed to come to fruition. In 2023, firms and individuals will start to pay greater attention to the “social” part of environmental social governance.
It’s not enough for there to be more Black hires at big institutions, or one-off mentorship schemes for under-represented groups to get into the tech industry. My cofounder of Black Seed, Cyril Lutterodt, says that Black founders are over-mentored, but under-funded. Data from Crunchbase shows that Black-founded startups received record funding in 2021, with over $1 billion invested in the first quarter of 2021 alone. But by the second quarter of 2022, that had dropped to $324 million. Even in The first half of 2021, Black entrepreneurs only received 1.2 percent of the total 147 billion dollars invested in US startups.
I’ve lost count of the amount of times that founders I know have gotten close to significant funding—and then heard the phrase, “if it was up to me …” In 2023, people in positions of power and influence in the tech industry will realize that it is actually up to them. There are a few instances of powerful people drawing attention to the failures of the tech industry. For instance, Serena Williams’ fund, Serena Ventures, is focused on “diverse points of view”: 47 percent of the firm’s investments have Black founders. Established investors and firms will begin opening up their contact books—and their pocket books—or otherwise risk being left behind, as their failure to diversify is exposed by the success of firms like Serena’s.
This requires building an ecosystem that works to uplift diverse founders and individuals, but this has to work along two prongs—both the personal and the systemic. Black Seed, the venture firm that I cofounded and now co-run, is part of this ecosystem in the UK, along with firms like Impact X, Community Growth Ventures, and Cornerstone Partners. Often, Black founders have to raise more money than their counterparts who are better connected or maybe went to the “right” universities, to even get a look in. According to Extend Ventures, just 0.24 percent of all venture capital available to UK startups went to 38 Black founders between 2009 and 2019.
The first prong, which is the personal approach, is crucial to enabling diverse founders and hires to actually get their ideas in front of the right people. In 2023, VCs and investors will realize that they need to look further afield for fresh perspectives. This means powerful people who are well connected will make introductions across their networks, to encourage others to take a risk on someone with a new perspective, or from a totally different social background. As part of Black Seed, we run collaborative events—using the name recognition and built-in network of an established fund or firm to attract more interest to lesser known ventures and individuals—and we’ve seen this model start to spread around the tech industry. This can lead to unlikely collaborations and new ventures that draw on the expertise of established players along with a fresh perspective—consider Google’s Black Founders Fund, which is based in the US but a similar example of the dynamic above.
In 2023, VCs and investors in the tech industry will begin to actively invest in the “social” part of ESG, as they will realize their risk becoming obsolete otherwise. A 2020 report from Morgan Stanley found that 61 percent of VCs said that the BLM movement affected their investment strategy, and 43 percent said that finding multicultural investment opportunities was a “top priority for their firm”, a 10-point increase from 2019. I’ve witnessed firsthand as people have become more candidate and honest about how these dynamics around race and class operate in the tech industry—a few years ago, many powerful players weren’t even asked questions about how they planned to be more equitable in this space. In 2023, these conversations will become more widespread, and compel a greater number of powerful players to act.
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