BRITISH Asian entrepreneurs have called for more action to improve diversity in the venture capital investment market after it was branded “unacceptable” and “woeful” by a powerful committee of MPs.
The business leaders called for funds dedicated to ethnic minorities or female founders to make the system fairer.
Venture capital is a form of investment in early-stage companies, typically in return for an equity share of the business.
A recent damning report by the Treasury committee of MPs said, “Venture capital firms are dominated overwhelmingly by white men, and the recipients of venture capital funding are even more unrepresentative of the wider UK population in terms of gender and ethnicity.”
It added that while there has been some improvement, “it is happening far too slowly, and affecting rapid change should be viewed as a priority by government and industry.”
Ruby Raut is the CEO and founder of WUKA (Wake Up Kick Ass), the UK’s first reusable and leak-proof period wear.
Raut, who has been invited to meet numerous venture capital and private equity firms over the years, told Eastern Eye: “In the early days, I was often not taken seriously reasons for which, I think, are due to being an immigrant woman of colour and secondly because my business centred around menstruation – a topic most males in the room were uncomfortable talking about. I would often be applauded for what was a brilliant idea, but one that would be better suited to the subcontinent in parts of the developing world such as Africa, India, Bangladesh or Nepal, suggesting it should be a charity and not a business.
“Fast forward to today and one of the more common questions I get today is from investors, asking what my background is and whether I have the necessary credentials to be in business asking specifically for my education background and/or evidence of working in business prior to starting WUKA.
“It surprises them when I answer that I do not have either of those on my CV to note, but despite that WUKA has become the UK’s #1 period underwear brand generating £10m in revenue to date.”
Raut added: “It would be great if there were more VC funds dedicated to BAME founders or female founders where the social and environmental impact of the business is taken into consideration as much as profit.
“Perhaps a platform to highlight success stories of Asian entrepreneurs – particularly women and female-led businesses – would be beneficial in order to inspire more of them to start and run successful businesses themselves?
“By showcasing examples of resilience and achievement, we can inspire others to follow suit, challenge stereotypes and generate more revenue for our economy.”
The report by MPs urged the government and British Business Bank, a stateowned economic development bank, to consult on the creation of venture capital funds to promote greater diversity in venture capital allocation.
It also called for more data to be collected by finance firms on diversity.
Sonya Barlow is the founder of the Like Minded Females Network, a social enterprise with a vision to bridge the skills gap and promote workplace equality.
She told Eastern Eye that, “As a British Pakistani woman, it really worries me to see that the statistics aren’t truly shifting fast enough in funding in alignment with the number of female founders who have ideas and are executing them.
“I know how hard it is to start a business and even harder to sustain; access to resources and funding plus networks are crucial, but there are so many hurdles to jump over that make that whole process both frustrating and time-consuming.
“To raise investment means that you have to basically take time out of your business to build those networks and pitch – this has its own costs.
“Furthermore, those who are the first point of contact in many instances are straight out of university or with little experience, so how can they be in charge of making big world decisions on which business model works when no one is truly guiding them?
“There is a systematic and structural issue which can only be fixed through transparency routes, access to funds, networking opportunities, truly equitable legislation and ensuring the right people are in the room.”
Barlow revealed she is launching an app to solve the problems around loneliness, networks and inclusion.
She added: “Now, to scale, I will need funding, and despite the traction we have had organically, thinking about funding is a difficult task when the VC isn’t catering to the needs, requirements or business hustles or south Asian women, despite our ability to generate products, sustain revenues and change the landscape.”
Asma Khan is the founder of restaurant Darjeeling Express in central London.
She said: “I am grateful that I did not need to go through the process of raising funding for my business.
“The separatist challenges faced by Asian and BAME founders are unacceptable – and it cannot be that none of all of their proposals were not fit for funding.
“It is often the case of self-selection and we must question the bias of those in power.”
Meanwhile, data in August showed that venture capital trusts invested more capital last year despite raising less cash.
Some £664 million across 345 investments were ploughed into early-stage companies last year, according to figures from the Venture Capital Trust Association trade body.
