Black entrepreneurs and business owners have faced disproportionately more challenges in the face of the COVID-19 pandemic, and according to Harvard Business Review, studies show black founders are underrepresented year on year, receiving <1% venture capital funding.
To bring this vital discussion to the forefront Founders Forum partnered with McKinsey & Company, in collaboration with accelerateHER and colorintech, to hold a roundtable to mobilise the voices and influence of key figures in the UK tech sector. The 65 participants included a diverse mix of government leaders, CEOs, investors, community organisers, founders, and thought leaders from across Europe and North America.
The roundtable discussion entitled ‘Putting Your Money Where Your Mouth Is: Building & sustaining more Black-founded businesses‘ culminated in a brainstorm of tangible actions* tech leaders can take to support more Black founders, and achieve more diversity in the technology and startup ecosystem.
Special guest speaker and McKinsey Partner, Shelley Stewart III, set the stage for the brainstorm discussion by detailing the economic and sociocultural barriers that Black entrepreneurs face in the US and beyond. To derive actionable solutions, participants were invited to focus on topics such: as investing in Black founders; creating and supporting more diverse leaders; fostering Black talent; and encouraging government action to support Black- and minority-owned businesses.
*An important note: The following insights are high-level concepts. Black people are not a monolith and there is no universal experience for any group of people. This article is presenting a generalised set of circumstances, trends, cultural insights and core findings to offer a framework of action-based solutions in a short article.
Core Session Findings
We need to be able to talk about racism: Speaking openly about the root causes of underrepresentation in technology and startups, including everyone’s own biases, is a critical first step to remedying the problem.
But more than this, action is desperately needed: Talk is valuable, but only as a prelude to action. Companies and leaders continue to worry about making wrong moves, but doing little or nothing is the biggest failure.
Black businesses, talent, and ideas are there for the finding, and the pipeline is not the problem: Employers and funders should stretch their networks to connect with founders and talent where they are, instead of waiting for them to break through race-based barriers.
Transparency and accountability are key for progress: Public commitments to diversity, equity, and inclusion, and being transparent with progress against those goals, are critical steps for investors and companies to increase diversity.
A Framework For Tech Leaders
Investment & Capital: Funders must work hard to re-balance historic wealth disparities. This can be done by proactively listening to grassroots organisations and working on deal flow from underrepresented groups by targeting early stage-entrepreneurs and establishing quotas. Beyond this, investors should work on their own hiring policies to have their teams better represent the investments they wish to make.
Talent: As with representative investors, role models are critical for adults and young people in all positions. All need exposure to founders, funders, and other people in positions of leadership who look like them to be attracted to tech and entrepreneurialism, and to feel comfortable and welcome in the workplace.
Leadership: Organisations must be transparent about intentions and actions to signal their work to the market. Organisations that publish their diversity goals, publicly track progress against them, and have external entities assess their work will promote more diverse talent and ultimately stand out.
Government: Given government’s role in allocating capital, it should do more to distribute funds equitably. This could involve modelling best practices for the private sector, as well as launching public/private co-investment vehicles focused on minority entrepreneurs, whilst making programs designed to support and promote Black- and other minority-owned businesses more straightforward.
Immediate Next Steps to ‘Put your Money where your Mouth is’:
Consider committing to at least one of the five actions below:
- Capture and contribute to make more data available. At a minimum this should include reporting equitable deployment of funds and capital allocation, and tracking employee diversity across all levels of your organisations. Consider earlier-stage data sources, such as diverse candidates interviewed, businesses pitched, founders mentored and make these publicly available.
- Undertake Lead, Listen, and Learn sessions. Host discussions with a broad cross-section of Black and other underrepresented people in your organisation – to understand the barriers to advancing equality, and to identify CEO-led actions and decisions that can make a meaningful difference. Implement actions within your organisation.
- Understand pay gaps with data. Benchmark diversity across the full pipeline of roles: junior, middle, senior and C-suite. Understand the specificity of wage gaps, the discrepancies between line and staff roles, and the diversity balance in different departments.
- Sponsor people of colour. To succeed, employees and founders of all genders need not only mentors, but also sponsors – people who will advise and promote their participation in high visibility projects and networks – actively planning for their progression. A conscious approach is needed by senior leaders to sponsor diverse candidates.
- Supplier multiplier. Set targets for procurement from underrepresented founders and communicate to suppliers how important diversity is to you. Encourage and support suppliers who prioritise the issue and drive change.
Work with & support relevant organisations
Work directly with and give support to relevant organisations that champion diversity in the technology sector by providing membership for managers and across your organisations or funding their work directly. A full list of the 15 UK organisations present can be found here.
If your organisation is seeking ways to take action in your business or looking for additional ways to shape your commitments and targets, please visit McKinsey’s Diversity & Inclusion hub. To work directly with diverse entrepreneur communities, get in touch directly with accelerateHER and colorintech. Community programs like these are designed to help underrepresented entrepreneurs connect with commercial networks, role models and resources to help the current and aspiring Black entrepreneurs pursue business ownership with more confidence and support.