A letter to Black Businesses and our Allies
Enterprise continues to be one of the most important, if not the most important engine of the UK’s economic growth. An overwhelming £25 billion per annum has been reported[1] to be the economic contribution of ethnic minority entrepreneurs to the UK — an equal to vital sectors such as the chemical industry and the UK’s 2nd largest region, Greater Manchester.
Yet of this figure, it is said that Black entrepreneurs contribute a total of £10 billion[2] — which is over 30% of all that’s contributed by ethnic minority entrepreneurs even though black businesses only make up a small fraction within this group. So, the questions remains, why are we as a country not focusing more on black entrepreneurs and their continued growth?
According to a research paper from Dr Stuart Fraser of Warwick Business School it’s said that black entrepreneurs are four times more likely to be rejected for funding when approaching their high street banks than their indigenous counterparts. Not only that but they are also more likely to not apply for funding, simply due to the fear of rejection[3] — a real issue which the British Business bank highlighted in 2017, in a report which displayed that if the total demand from *would-be seekers were to be realised SME funding applications would have increased by 50% that year alone[4].
Although this issue has been known for years, it has also been neglected for some time and only really came into the light this year after the breakout of COVID and the clear disproportionate impact it had on black communities. Not only were black entrepreneurs running businesses likely to suffer more from the lockdown due to the types of businesses they were running but a report from Extend Ventures & YSYS highlighted the increased likelihood of them not being able to access the government related funding schemes — simply due to not believing that these were available to them[5]
With these businesses, despite the obstacles stacked against them and the lack of funding options available to them in critical times they continued to prevail and persevered. Based on what we’ve seen since the breakout of the pandemic, many black businesses have pivoted. They made it work no matter the circumstances and many excelled in the face of adversity and used this obstacle as a steppingstone to their next level.
One example of a black led business who has shown great perseverance and excellence is Marshmallow, the Insuretech company led by Jamaican born twins Oliver and Alexander Kent-Braham, who recently became the 2nd black led business to reach ‘unicorn’ status after securing $83 million in their series B round. Although this is a great achievement — it is not just their fundraise that makes this occasion special, it is about how they did it that proves their incomparable value; as they secured what your typical start-up does in 7 rounds in just 3 — which is absolutely unique.
Another great example of a great black business who we have watched not only succeed but overcome is London based clothing brand Elsie & Fred. Elsie and Fred saw a significant drop in sales due to their focus on providing festival wear through platforms such as Asos and their website where they target consumers directly.
They saw their revenues drop significantly and accessing funding became seriously hard due to their businesses lack of physical assets as they operated a fast-growing FMCG brand with an online presence rather than a physical. Nevertheless, the founders continued pushing forward. They let go of staff, sought alternative funding options, joined likeminded business communities and weathered the unpredictable storm. Today they are thriving once again and are releasing another clothing collection soon.
Above are just two examples of black led businesses which we have seen persevere and excel, yet there are many others such as Skn Doctor, Slider Cuts, Wosi Wosi, Local Honey Man, Mixtape Madness and many more — all of whom we have been fortunate enough to work with on their growth journey this year.
Some of which we were able to support through our partner network — which increases the likelihood of entrepreneurs who have been marginalised or suffer from the fear of rejection in accessing funding. Yet with or without us they have all found a way to push through and it’s for this reason that we need to collectively support these black and underestimated businesses as this pandemic has shown that their perseverance and resilience is truly unmatched regardless of the odds stacked against them.
Yet we at Lendoe cannot defeat this issue alone. This fight is one that requires a collaborative effort of business owners, communities, industries, organisations and legislators. We have taken the first step by partnering with Extend Ventures to bring to you the very first, Access to Finance event, and have fortunately found the sponsorship of Launch with GS (Goldman Sachs) to make this a reality. However, this event despite the amazing line-up and our wonderful partners and sponsors as mentioned prior will not be enough.
The problem is deep rooted, according to the all-party parliamentary group’s latest report — there is ample evidence that those from BAME led groups are the most discouraged, when accessing finance and those from Black African communities suffer ten times more from the level of discouragement than their white counterparts[6].
Such perception can only be tackled with the support of the banks, alternative finance providers and wider finance industry along with the platforms like Lendoe, such as 10X10, Cornerstone, Black Seed Ventures, CGV ventures and many others. All of whom aim to help black and diverse entrepreneurs access funding. Hopefully we can discuss this more as a collective tomorrow, in an open forum and as we seek out solutions which lead to economic growth, equality and opportunity for us all.
So, I leave you with what I heard our Prime Minister say so eloquently this Monday at the Reception to mark Black History Month at №10 Downing Street “there is talent, ingenious, flair and imagination and enthusiasm everywhere in the country evenly distributed through the population yet opportunity is not” and it’s for this very reason that I believe we need to focus on black entrepreneurs and Building Black Better because if the talent within this underserved group is unleashed one can only begin to imagine what this country will look like.
Thank you for your time and I hope to see you tomorrow. For discounted tickets (50% off) to our event click here.
Definitions & References
*Would-be-seekers: businesses who are discouraged or deterred from applying for finance, despite identifying a need for it.
[1] FSB — Unlocking Opportunity: The value of ethnic minority firms to UK economic activity and enterprise — July, 2020
[2] Centre for Research in Ethnic Minority Entrepreneurship (CREME) from Aston University.
[3] Dr Stuart Fraser - Is There Ethnic Discrimination in the UK Market for Small Business Credit — 2008
[4] British Business Bank — Small business finance markets — 2016/17
[5] Extend Ventures — Impact of Covid-19 on black and ethnic minority led businesses — May 2020
[6] APPG Fair Business Banking — Scale up to level up: Reforming SME Finance — September 2021
