Patricia Hamzahee, Founder of Integriti Capital and Conduit member, writes about the vital role data can play in enabling equity of outcomes for Black and ethnic minority-led businesses.
A recent study by the ONS states that Black people are almost twice as likely to die from COVID-19 than their white counterparts. However, when controlled for underlying health conditions and deprivation, they are no more likely to die. We await the report from the scientific inquiry by NHS England and Public Health England into the disproportionate impact of COVID-19 on the Black and ethnic minority communities in the UK, when death is a real worst case; in the meantime, we must also examine the structural health and socioeconomic injustices faced by ethnic minorities in Britain, as well as understand if any of the underlying health issues cited are more likely as a result of deprivation.
The disparity is also devastating the economic activity of many people of colour who already live on the margins. As the Runnymede Trust reported in The Colour of Money, racial inequalities are hindering a fair and resilient economy. Looking at four key economic drivers – savings, poverty, education and employment – Runnymede finds Black and non-Indian Asian people in Britain have between 10 and 20x less wealth than White counterparts. The report also confirms that ethnic minorities are more likely to be in insecure employment or to become unemployed.
A survey from The Ubele Initiative reported that some 90% of Black, Asian and Minority Ethnic (“BAME”) -led community organisations are likely to close if the current crisis continues into June.
With the whole United Kingdom facing hardship, and in recognition that small and medium sized enterprises are the backbone of the economy, the Government has put in place substantial financial support for businesses, including for start-ups through the Future Fund and for small businesses through its Bounce Back loan programme.
While these are welcome initiatives, they will not positively impact the Black and ethnic minority business community unless some important changes – in both attitude and delivery – to address structural biases are made. These changes must involve not only government, but also banks, venture capital providers and impact investors.
I argue such changes should also include such self-professed changemakers as constitute those of us in the Conduit community.
Challenging the status quo
All of the existing evidence points to the fact that it’s essential to support systemic change to ensure economic wellbeing across the most marginalised communities.
I am sure that many of us advocate for the equality of opportunity, where the same support is available to everyone regardless of background or life circumstance. This seems fair – until you realise that varying degrees of support are required to compensate for the differences that deny equal access. This is where equity of outcomes should be the guiding principle. Equity is the only way to guarantee fairness.
When less than 1% of founders in Europe are Black, less than 1% of VC funding goes to Black men and less than .006% of VC investments goes to Black women, we must be prepared to shift the status quo significantly on race with the same determination that we’re tackling gender disparity.
The funding ecosystem for entrepreneurs in the UK (including funders and beneficiaries) is overwhelmingly white, male and London-based.
Additionally, the narrative about Black and ethnic minority founders has been hijacked. There are stories about pipeline and education, yet there are very few around implicit bias, financial lockouts and the resultant financial ghettos that have been created.
A recent survey by Extend Ventures of Black and ethnic minority-led businesses in Britain showed that almost 50% of them do not plan to access or expect to qualify for any government support scheme. These businesses are either ineligible for the schemes or reluctant to burden themselves with debt. Businesses more than 9 years old – 24% of those surveyed – have never taken institutional investment nor government support.
The bottom line? The status quo leaves minority founders fending for themselves.
The survey also showed that there is an emerging and exciting cohort of young small businesses led by Black and ethnic minority founders that needs to be nurtured. These companies have been built in a prudent and resilient fashion, non-expectant of state aid.
As we emerge from this crisis, we cannot afford to take our eye off these businesses or allow them to be penalised for prioritising sustainable survival over debt-laden risk.
“Injustice anywhere is a threat to justice everywhere.”
Martin Luther King Jr
As an American living in Britain for over 30 years, mindful of making comparisons between these two countries, I think a few lessons can and should be learned from the gains – still not completely secure – that Black Americans have made over generations:
- Collective action to bring together the various organisations working for racial justice to overcome a ‘divide and conquer’ reality with duplication and diminished resources.
- Intersectionality to work with allies to advance our mutual interests, as seen in the US when the Civil Rights movement bolstered the Women’s Rights movement.
- Self-sufficiency to create solutions that we can lead and build, such as community development finance institutions to identity-based investment, lending and philanthropic vehicles.
Data is everything
I am surprised at Britain’s reluctance – or perhaps ambivalence – to collect data on its ethnic minority communities. It is astonishing that neither race nor ethnic origin is recorded on death certificates.
Such blindness is prevalent in the UK start-up ecosystem.
Without data, we cannot marshal the evidence that is demanded before change can be made. As we have seen with the gender divide, information and evidence has supported successful campaigns for 30% Women on Boards, Gender Pay Gap reporting and the Invest in Women Code.
We are far from having an Ethnicity Pay Gap reporting or an Invest in Ethnic Minority Business Code. We are not even certain that any of the government scheme providers, in terms of the banks, are recording the ethnicity of who they are supporting versus who they turn down. Certainly, few VC firms collect – let alone share – data on the ethnic diversity of applicants and pipeline.
There is great discomfort when it comes to asking about race.
I am part of Extend Ventures, a team of serial entrepreneurs, strategists, investors and bankers who have come together to help democratise and diversify access to the funding and support required to build scalable ethnic minority-led businesses. We are proudly supported by TechNation, Capital Enterprise, ImpactX and Fresh Business Thinking (home of the Great British Entrepreneur Awards).
To make a dent in the lack of data, we are launching an important research project that uses similar methodology to a report by the Kauffman Fellows in the US that showed diverse founders returned 30% more capital to their investors at exit. Using machine learning to gather our data on UK startups, including perceived and actual ethnicity, we will have the tools to change the status quo for good.
If you are interested in learning more about the Extend Ventures research project, or want to offer Conduit-connected support, we would love to hear from you.
Patricia Hamzahee is an advisor, an investor and a philanthropist. Following more than 20 years in investment banking and financial communications, she now helps social enterprises attract private capital and advises funders on their responsible investment strategies. She is co-founder of Extend Ventures, an Associate Director of The Finance Foundation, a member of Women in Social Finance, a Trustee of Ballet Black and co-Chair of the World Council of International House. She is a past member of the BVCA’s Responsible Investment Advisory Committee and former Chair of Black Cultural Archives’ Development Board.
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