A free online advice series for startups wants to diversify the funding ecosystem by targeting founders from underrepresented groups in their first two sessions.
Huckletree, a workspace accelerator, has partnered with venture capital firm, LocalGlobe to provide three sessions of funding insights and advice for startup founders during the first quarter of the year. While the session to help female founders took place last month, in February, they will hold a session to help Black founders increase their chances of securing funding. The third session, expected to take place in March, will be open to all founders.
According to a shared statement about the series, Huckletree said it wanted to play a part in diversifying the funding world and make it “fairer” by empowering founders from various backgrounds with relevant knowledge.
Making fund allocations more diverse
Huckletree Growth and Ecosystem Manager Lauren Apostolidis said: “At Huckletree, we run Growth Services that are exclusive to our members; these are designed to support them with their growth and challenges by connecting them with investors, partners, and ambassadors. We’re so happy to be able to offer some of these incredible connections and growth opportunities to the wider start-up ecosystem and community.
“For 2021, we’re excited to be launching quarterly partnerships with four incredible VCs to drive exposure for them to incredible underrepresented talent from our network. There are so many ways that VCs are looking to broaden their deal flow, as well as reach founders who might not be able to get ‘warm introductions’, so we’re proud to be working with diversity-committed funds like LocalGlobe, connecting them with founders to give them invaluable advice about their business, pitch and fundraising plans.”
How to diversify the funding sector: VCs
Hopefully, this series marks the start of further partnerships between venture capital firms and organisations that can connect them with business founders from underrepresented groups. However, the UK’s venture capital world continues to suffer from a diversity problem as a 2019 report from non-profit organisation Diversity VC shows.
The study found that 65% of firms didn’t have a woman as a senior member of their investment team, while 40% had no women represented at all. Ethnic minorities fared even worse, and only made up 3% of VC employees in London while only 26% of the city’s VC workforce were non-white. With the British VC sector being white and male-dominated, there is a high chance of unconscious bias occurring when investment teams allocate their funds.
Diversifying VC firms internally should aid in the more inclusive allocations of funds while engaging in events about funding underrepresented groups should enlighten existing decision-makers about diversity and inclusion matters.
The impact of a homogenous workforce in venture capital is seen in the low numbers of Black entrepreneurs who have received funding (only 0.24% over the past decade). The report released in 2020 by diversity-in-VC research firm, Extend Ventures, found that only one Black female founder raised Series A funding during this period. It also found that only 1.7% of funds at all stages went to BAME entrepreneurs, while 76% of investment went to all-white entrepreneurs teams compared to the 23% mixed teams received. On the gender front, 68% of funding went to all-male teams while all-female teams only received 3%. Mixed-gender teams fared a little better at 29%.
With venture capital being predisposed to funding riskier early-stage businesses, it can be one of the few lifelines startup owners and their teams have to access vital initial funds. Some of the biggest companies today had been the recipients of VC funding initially, which means VC firms are potentially missing a trick if they don’t diversify their investment strategy and fund different types of businesses.
The session for Black founders will take place on 17th Feb (3.30- 5.30pm GMT). Applications are open here.