Future Fund leaves diverse founders short-changed

by Startacus Admin

Change is slow, as Future Fund leaves diverse founders short-changed, with female and BAME business leaders questioning its fairness.

Future Fund, a support package for startups that was launched with considerable fanfare by the UK government just over a week ago, has come under increasing scrutiny for not supporting the broad and diverse range of UK founders, with female and BAME business leaders in particular questioning its fairness.

In case you hadn’t heard, the Future Fund will provide government loans to UK-based companies ranging from £125,000 to £5 million, subject to at least equal match funding from private investors.

UK startup businesses will be eligible for the scheme if they can attract the equivalent match funding from third-party private investors and institutions and (this is the potentially unfair part) have previously raised at least £250,000 in equity investment from third-party investors in the last 5 years.

What’s unfair about that, some of you will perhaps ask - after all the criteria for eligibility is equal for all.

However funding is often not fair and for a support package called Future Fund, we have to look to the past to understand just why many voices in the UK startup scene are taking issue with the criteria. 

Jenny Tooth OBE, Chief Executive of the UK Business Angels Association, sharing her thoughts on the Future Fund said: 

“It is important to recognise that the Future Fund in its current model will directly reinforce the existing imbalances in the Equity ecosystem across the UK.”

Playfair Capital and Tech Nation, who are bringing together 30 of the UK’s leading VCs and 100 female founders for more than 300 remote office hours meetings on Thursday June 4th, 2020, is a reaction to the systemic issue that female founders face.

“Female-led companies still only achieve 1p in every £1 invested in the UK and so Office Hour events like these are crucial to breaking down those barriers and creating opportunities for those teams to be supported by the investment ecosystem.” explained Lauren Nicholson, Founders’ Network Lead at Tech Nation.

Let’s just highlight that reported statistic again. Female-led companies still only achieve 1p in every £1 invested in the UK.

It’s stats like this that drove Startacus itself to put on the recent LINEUP 2020 event, with female founder pitch competition - it’s a shocking stat. 

However initiatives like pitch competitions and office hours are simply short-term steps. 

Giant steps on the other hand, require national policy and the Future Fund criteria that in reality offers 1% chance to female-led teams, or 11% chance if you add in mixed gender teams, is hardly future looking and fair. 

There are plenty of grassroots initiatives to address the above, however those projects will take time and if COVID-19 has taught us anything, it's that when push comes to shove, we can, and en masse, make quick societal change. 

So does the Future Fund, just further prop up an unfair system?

“I literally feel sick after reading that tweet,” wrote one entrepreneur in a WhatsApp group for female founders. “All this will do is fund the old boys’ club.” - Sunday April 26 2020, The Sunday Times.

The old boys’ club and the white, old boys’ club?

Your Startup, Your Story (YSYS), a startup community for founders, developers, creatives, investors, that recently launched #YSYS2023, a bold initiative to connect 100,000 diverse individuals to startup and career opportunities in tech, thinks so. 

In a brilliant article by its CEO and Founder Deborah Okenla, she, like an experienced criminologist, breaks down that The Future Fund is not currently being relevant for diverse founders and that with this programme, inclusion has perhaps been put on the back burner. 

Citing quotes and relevant articles by leading lights such as Charmaine Hayden, partner at Goodsoil VC, Dama Sathianathan, partner at BGV, Check Warner, partner at Ada Ventures and CEO of Diversity VC, Anthony Rose, CEO, and Co-Founder of Seedlegals, Nii Cleland, Founder of Flair Football and Ashleigh Ainsley, Co-Founder of Colorintech, it’s an article that also offers some solutions to the current barriers that the Future Fund just further inflates.

Kike Oniwinde, founder of the BYP Network explained why it is important to not just accept the Future Fund in its current form: 

“It’s important that we challenge the Future Fund because it shows us that there are people that think because we are in a pandemic, diversity and inclusion goes out the window. 

COVID-19 is disproportionately affecting BAME communities yet the support and funding is mainly benefiting white men especially the elite. Articles such as Deborah’s and Seed Legals are able to deep dive into the problematic criteria of the Future Fund, who was behind the decision and ways in which to make it inclusive.”

However, just as COVID-19 has immediately changed the way we work and live, there is a real feeling (from Startacus at least) that Rishi Sunak, UK Chancellor and Future Fund ‘creator’, has an open ear and is willing to review and change policy. 

Just a few days ago, Emma Sinclair started a petition to Rishi Sunak via Change.org asking to Align the Diversity Agenda and The Future Fund writing that it is vital that the Future Fund does not set back the diversity agenda.

“We the signatories on this letter are happy to collaborate with Government to help ensure we enable the most innovative businesses from a diverse range of founders to be funded, to benefit both the economy and wider society.”

Let’s all sign this as a starting point at least. 

Perhaps with each petition, article, quote and policy suggestion, Rishi is for changing, and change is gonna come, but for the time being at least, it’s fair to say that the Future Fund currently leaves diverse founders short-changed.

Written by Alastair Cameron, co-founder of Startacus. 

You might also want to read Future Fund may not encourage investors to invest.

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Published on: 27th April 2020