Despite, well, everything, the U.S. is still the best place in the world for Black startup founders to raise money. The check sizes are bigger, the market more mature, the ambition oversized. There are more funds, more options, more opportunities, more, more, more.
It’s quite easy to harp on the dismal funding and often discriminatory treatment that Black founders receive in the U.S. Through the haze, though, the reality is that the heart of the American Dream is still beating.
For example, Lotanna Ezeike, a serial founder, said he’s looking to fundraise for his new startup in the U.S., despite raising more than $1 million for his U.K.-based fintech, XPO.
“Across the pond in the U.K., thinking tends to be very limited, especially around the seed stage,” he said, adding that a seed in the U.K. is a pre-seed or family round in the U.S.
“I think this is because of how small the U.K. is compared to other regions, so the mind can only dream so big. It’s a spiral really — less wealth, less capital, fewer ideas that become unicorns.”
Cephas Ndubueze, who is from Germany, echoed similar sentiments. He said he still looks to the U.S. for venture funds for his startup because there are more success stories of Black founders in the U.S. than in Europe, meaning a greater chance of him finding his own path compared to Germany.
“I can definitely say the U.S. is a better environment for Black founders,” he told TechCrunch. “Why? More diverse investors in the U.S. More investors are investing in nontraditional businesses. More institutional investors are providing ticket sizes from $100,000 to $500,000 in the idea stage, more opportunities to build a founder network, and more investors that have already invested in Black founders in the past.”
While the reception of Black founders may appear warmer in the U.S., the numbers show more of the same. (France and Germany do not track race data, though founders and venture capitalists interviewed by TechCrunch revealed anecdotal evidence of persistent racism in both markets.) As an ironic result, founders look to the U.S. for networking opportunities.
Rebecca Cathline, the founder of a Paris-based Afro hair startup, said she turned to the U.S. for funding because there was a better understanding of the market she wanted to enter. Although millions of Black people live in France, it is still hard for many to find products that cater to their hair texture. While speaking to investors in France, Cathline said many didn’t understand the need for more products in the Afro-hair space.
“They didn’t understand how big the market was at the time,” Cathline told TechCrunch. Black hair care is worth more than $1 billion in the U.S. alone.
Rukayyat Modupe Kolawole, the British-Nigerian founder of a Germany-based fintech, said investors in the U.S. are more open toward helping Black women, especially as they are more likely to acknowledge the racial problems hindering Black economic progress.
“People say, ‘Oh, we can’t talk about it because we don’t see race,’” Kolawole said of many European investors. A likely byproduct of this is that more diverse investors and funds in the U.S. specialize in backing overlooked founders. Such specialties are frowned upon in, at least, the U.K., where the conversation of structural racism remains taboo, according to Chauntelle Lewis, the U.K.-based inclusive communities manager at Overlooked Ventures who focuses on the U.S. market.
“The U.S. has many firms leading inclusive and accessible community initiatives or groups for historically ignored founders to gain insights and resources about how to get funding,” Lewis told TechCrunch. “Although there are multiple U.K. and Irish firms working to disrupt the investment landscape, the conversation hasn’t fully embodied an intersectional lens beyond gender.”
Another difference is Twitter. Lewis said that the U.S. investing community is more active on Twitter than it is in the U.K., which focuses more on LinkedIn. This contributes to an open-network and closed-network divide, which is a problem as the U.K. and Ireland heavily rely on warm introductions within closed networks. In the U.S., people are more willing to vouch for someone they might not necessarily know but still believe in.
The U.K.’s emphasis on LinkedIn is another element of persistent classism. On LinkedIn, one can see someone’s educational and professional history; an Oxbridge investor is more likely to connect with an Oxbridge founder than someone outside of that academic sphere. In its own sense, it is a way to pre-vet even strangers. Meanwhile, Twitter is more of a spontaneous gamble in terms of who you run into on the timeline and helps build a sense of community, Lewis said.
The lack of such a robust network in the U.K. means “many startups opt for alternative VC funding routes,” she said. “Especially if they are from historically ignored backgrounds.”
The trend of Black Europeans coming to the U.S. doesn’t appear to be ending anytime soon, but with more than $300 billion in venture dollars swirling, there are more than enough slices of pie to go around. The question is always how big of a slice they will get.