During the past few months, debates around diversity and racism have gripped the consciousness of the nation. From Meghan Markle’s revelations about her experience in the royal family to Piers Morgan’s departure from Good Morning Britain, there has been a lot to mull over. Intriguingly, the most controversial thing on race and diversity, which really should have been nothing more than a deeper dive into existing research, was the report of the Commission on Race and Ethnic Disparities published on March 31st. The report was widely criticised by equality campaigners and the government’s special adviser on race, Samuel Kasumu, resigned within days of its release.
We could lament on the shortcomings of the report, but here at Extend Ventures we made a conscious decision to move past the PR and focus on practical recommendations. This forward-looking approach has also been adopted by similar organisations. We are encouraged by the move towards practical solutions with specific and actionable policies, such as that taken by Cornerstone Partners, a leading angel network focused on investing in exceptional black and diverse founder-led businesses across the UK. Their report, Access to Venture Capital, mirrors many of the recommendations previously highlighted by Extend Ventures in our Diversity Beyond Gender report. Let’s take a look at our previous recommendations.
Data and its usefulness
“All venture funds should make data on their investments publicly available so they can be tracked to enable the inclusive ongoing reporting on the industry's performance on diversity.”
Some progress has been made to track and share investment data, but data is being submitted by only a few of the funds contributing to the billions invested into the venture ecosystem each year. There is still a long way to go to achieve the transparency required for real change.
The clearer the target, the clearer the goal
“A review of terminology as it relates to the UK’s Black and Multi-Ethnic communities, including replacement of BAME with language that does not include ‘minority’ and narratives that are enabling, so that future interventions can be better targeted.”
The shortcomings of catch-all terms such as BAME are becoming increasingly clear. The experience of Asian and Middle Eastern groups in the UK is distinctly different to that of people of African descent. For instance, the Black Founders Fund, a recent initiative launched by Google for Startups, received 777 applications from 18 countries in Europe, which highlights that the Black founder pipeline problem is more of a myth than a reality. However, such granularity would be lost if BAME was used as the overarching umbrella for this initiative. Importantly, when looking at terms to replace BAME, we must also look at enabling language. Research currently being conducted at the LSE finds that when comparing those of African and Asian descent, those who were raised without the legacy of being a ‘minority’ tended to achieve significantly better outcomes than their counterparts who viewed themselves in this way.
Diversity beyond gender, codes and quotas
Government to create an Investing in Ethnic Founders Code, mirroring the Investing in Women Code:
a. Encourage gender and ethnic diversity at partner and decision-making level at investment firms.
b. Encourage the implementation of minimum quotas to ensure that funds are investing 14% of the funds under management (including a minimum 4% for Black founders) for Ethnic-led companies.
Until the political will exists to address the disadvantages faced by under-represented founders, society will continue to miss out on the opportunities for significant returns for current and future generations. With reports such as Diversity Beyond Gender and Access to Venture Capital documenting the poor outcomes for diverse founders, we must work to ensure that these entrepreneurs do not continue to be locked out of access to scalable entrepreneurship.
Read our previous reports here.