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For our Investing Insights theme this month, we highlighted an underrepresented and underfunded group, Black Founders. Between 2009 and 2019, only 0.24 percent of Black founders received VC funding, including just one black woman. This is something we as a business are keen to bring to our investors’ attention, as well as provide as much support as possible.
We asked our Campaign Development team to share the Black-owned startups we’re watching right now. Keep reading to find out which startups are on our watch-list this month.
It’s reported that less than 1% of VC money in the UK goes to all-female teams. For black women, it’s 0.02%. Defying those statistics, in 2020, Yuty became only the 10th Black female-founded business in the UK to successfully raise VC funding.
Founded by Simi Lindgren in 2019, Yuty is an ethical beauty marketplace using AI technology to match shoppers of all skin colours and skin types to their perfect products. When building the platform, Simi realised that the data available to her was biased and didn’t necessarily include all of the skin types and tones needed to build their algorithm. Yuty crowdsourced this information, giving them the opportunity to cater to all skin tones for the first time. The business also has a focus on sustainability and is striving to reduce beauty waste by ensuring that consumers only purchase products that are tailored to them.
In 2020, Yuty raised an oversubscribed pre-seed round of £500k led by Ada Ventures, an investor focused on overlooked founders and markets. After its launch last year, it’s been reported that the business has seen 300% month-on-month growth, showing that their inclusive and diversity-first approach is working. Whilst it’s still early days for Yuty, we’re really excited to watch as they grow.
The parcel shipping industry has only grown as online shopping throughout the pandemic significantly increased global parcel volumes. In 2020, there were around 130 billion items shipped worldwide, but almost all are not insured. Uninsured businesses around the world are losing millions due to losses around the cost of shipping replacing items, or the cost of the item itself.
That’s where Anansi comes into play, an insurtech business building zero admin insurance products for e-commerce merchants, starting with a Shopify integrated app providing automated cover for shipping issues. E-commerce businesses can now decide which parcels to cover if their customers cancel an order at any time, giving founders the chance to focus on their business rather than on insurance.
Megan Bingham Walker, founder of Anansi, raised a pre-seed round in July 2019 whilst also receiving £1m in a seed round led by Octopus Ventures. She has been featured in Sifted’s “16 Black Female Founders in the UK Who Have Raised Funding” and in the UKTN talking about the recent venture backed deal round.
For all that Venture Funds and General Partners espouse their diversity and inclusion credentials, investment into underrepresented founders remains tragically low. One prominent EU fund only backed one female-founded firm, out of 65 investments, with women accounting for 0.2% of their portfolio founders.
The statistics are even much lower for companies with Black founders. Studies indicate that from 2009-2019, a paltry 0.24% of venture capital funds went to companies with Black founders. During that decade, only ten Black female founders received funding at all, with none receiving later-stage funding.
While the numbers are shocking, there is some cause for optimism as we are beginning to see signs that the tech and investment community are taking their obligations to be inclusive more seriously – Google launched the Black Founders Fund, and Impact X are giving out £100m to invest into minority ethnic-owned startups.
2021 has also seen some encouraging stories on the other side of the table, with a host of talented entrepreneurs reaching new milestones. One notable story is that of Insurtech heavyweight Marshmallow, which has now sold over 100,000 car insurance policies. The company was founded by identical twin brothers Oliver and Alexander Kent-Braham, alongside co-founder David Goaté. This year they became the second UK black-owned unicorn business.
It is hugely encouraging to see two Black British founders running one of the most successful startups in one of the hottest sectors. Plus, with $85m of fresh funding as part of their Series B, we can expect to see much more of Marshmallow’s fledgling success story.
European venture-backed startups founders unfortunately are still overwhelmingly white and male. And in some verticals, like fintech, this seems to hold even more.
A startup I would like to highlight, and one which is challenging the status quo in fintech, is Lidya. Lidya is a financial services platform with a mission to improve access to capital across fast-growing economies. The startup was launched in Nigeria, but alongside the home market it now provides services in Poland and the Czech Republic (what a bold move to internationalise these markets).
Since the launch, the company has given out more than 25,000 loans to SMEs and has built a global team across Nigeria, Poland, Brazil, Portugal, and the US. The startup has built tech for small and medium-sized businesses to access credit online and also manage their funds with tools to help these companies manage their cash flow, build better credit and access better interest rates.
To date, the company has collected a total of $16.5m across 6 financing rounds. A Series B round was announced in July of this year, with $8.3m raised from Flourish Ventures, Bamboo Capital Partners, Alitheia Capital, Accion Venture Lab, to fuel the company’s further global growth.