When Lola Adeyemi started a company that made chickpea stews and roasted carrot soups, just like she grew up in Africa, an uphill battle awaited her.
The food industry has notoriously low margins, and competing for grocery stores alongside long-standing household brands can be tough – and that’s ahead of a factor in Adeyemi’s race.
The Nigerian-raised woman from Toronto dipped in savings, received loans and grants, and turned to her husband’s small consulting firm to start It’s Souper.
Their products are on the shelves of Sobeys, McEwan and Foodland Ontario, but Adeyemi wishes entrepreneurs like her could find support more easily.
“I don’t want to be a unicorn. I don’t want to be the only black and immigrant entrepreneur here, ”Adeyemi said as she drove around giving samples to potential clients.
“I want others to be here too.”
Their experience is common for black entrepreneurs in Canada. They are often underfunded and unsupported by venture capitalists who put money into businesses run by people in their existing networks who are overwhelmingly white and male.
It is difficult to quantify how much less funding black entrepreneurs are getting because such metrics are rarely recorded in Canada. However, entrepreneurs and investors appreciate that they are on par or even worse than the USA
According to business information platform Crunchbase, less than one percent of the $ 543 billion venture capital offered in the US between 2015 and 2019 was given to black and African American founders. That’s only $ 4.9 billion.
Meanwhile, only two of the 300 grants the Canadian government offered women-owned companies went to black-run companies in 2018, said Amoye Henry, co-founder of Pitch Better Canada, which helps underrepresented communities access capital.
To date, Pitch Better has provided pitching advice to 306 Canadian companies and assisted 50 in finding funding.
“People want to give money and invest in people and things that they are very comfortable with, that look like them and that they can trust to get their money back,” she said.
Black entrepreneurs with no college or Ivy League education have no connection to wealthy alumni networks that have links to Bay Street or Silicon Valley.
The few who secure some money are often opposed to taking it because they can’t rely on family, friends or banks when they get into trouble, she added.
“They just feel like they can’t pay the debt back … white people will just take the debt and try anyway,” Henry said.
She and Pitch Better Canada co-founder Adeela Carter had to ask the black founders to receive amounts as low as $ 150,000.
“I remember saying I’ll help you find the money (if it comes down to it) just take the money,” Henry said of one situation.
“(The founder) just said, ‘I don’t want to ruin the opportunity for future black founders if I take it and can’t pay it back.'”
Isaac Olowolafe Jr. has been working in early-stage financing since 2015 when he noticed a shortage of black founders in Canada and founded Dream Maker Ventures, an investment arm for his real estate-focused wealth management firm.
Until 2019, he also led the Black Innovation Fellowship, an initiative sponsored by Ryerson University to support Black-led startups.
However, it is an anomaly. A 2019 study by the Canadian Venture Capital Association found that only eight partners out of 145 private equity firms surveyed were “visible minorities.”
According to the latest statistics from Statistics Canada, black people made up 3.5 percent of Canada’s population in 2016. Visible minorities made up 15.6 percent of the population that year.
Of the 132 partners of the venture capital firms surveyed, the association found that only 24 partners, or 18 percent, were visible minorities.
The poll didn’t say how many of these partners were black, but Henry and Olowolafe Jr. said Canada was few and that’s part of the problem.
Many of the black entrepreneurs behind funds go quietly, Henry said, because they only have enough money to disperse, and they fear that advertising their willingness to invest in the community will become a magnet for them makes for too many pitches that they cannot support.
But getting to that point is difficult, Olowolafe Jr pointed out.
Olowolafe Jr. believes that raising venture capital for black entrepreneurs relies on relationships as investors write checks to people they know and trust.
“It’s not about rebuilding the wheel, it’s basically doubling what works for other churches and getting it back to the black church,” he said.
Tackling unconscious bias is also part of the solution, said Ariel Gough, co-founder of Nova Scotia-based fragrance company Bailly.
“Everyone has subconscious biases based on their experience of how they grew up and who they were, but it is important that we realize that we may not judge entrepreneurs just by their ideas, goals or potential,” she said.
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Venture capitalists, she said, want to see traction, but to get there, most black founders don’t need money.
“It can be very daunting getting out of these meetings,” said Gough. “You often feel that all the hard work you’ve put into your company is getting you nowhere.”
Adeyemi noted that after George Floyd’s death in police custody last year, funding opportunities for black entrepreneurs began to emerge.
When companies pledged to help the black communities more, she found a $ 75,000 grant, but she is always aware that momentum incidents like Floyd’s death can easily resolve.
That would be a shame, she said, because the benefits of investing in black entrepreneurs are pervasive.
“When you empower people who are marginalized or just a black community, you empower the whole country.”
Tara Deschamps, the Canadian press
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