For many startups, one of the major sources of raising funds is through venture funding. While white startups have been successful at securing funds through this avenue, their black counterparts continue to struggle to raise or access funds to sustain their businesses.
In America, black startups receive less than one percent of venture funding. Though this is quite depressing, the situation is worse in the UK; Black founders received only 0.24% of all VC funds between 2009 and 2019.
Consequently, many blacks in the UK are relocating to the US with the hope of being part of the less than two percent who get venture funding.
This dire situation prompted Karl Lokko, Cyril Lutterodt, and their founding member, Yvonne Nagawa, to start the British early-stage venture firm Black Seed, according to Tech Crunch. The startup’s mission is to solely support black businesses that are underfunded and facing hurdles to scale up.
“We exist as a tech fund and a community,” Lokko said. “We exist to bridge that gap and give Black founders inclusion.”
According to Lutterodt, the initiative is to help bring about change in the UK, as many Black founders are over-mentored yet underfunded.
“We have built a pipeline of Black entrepreneurs, primed and ready,” he said, adding that the firm expects to make at least 10 investments over the next three years and has a reserve fund for follow-on investments.
In this regard, Black Seed will focus on early-stage investing and also serve those who lack access to angel investors, according to Tech Crunch. The startup will become one of the few firms in the UK that focus mainly on black founders.
Black Seed recently raised $6.2 million as part of its inaugural fund to solely support Black founders in the country. The company aims to raise an additional $6.5 million by the close of the seed round.
The founding round was led by asset manager M&G Investments, with additional support from Atomico and Molten Ventures.
