How venture capital’s racial problem puts the brakes on start-ups

“For the longest time I thought maybe I wasn’t doing a good enough job in interviews,” she tells The Australian Financial Review.

“But when George Floyd’s murder happened, it made me think how this disproportionately happens to black women and people of colour. I’m always the only one who looks like this. I don’t know any other Bangladeshi women in the ecosystem.“

After successfully running the #ShareThePlatform campaign in 2020, enlisting the likes of Malcolm Turnbull and Janine Allis, to raise the profile of First Nation’s and black entrepreneurs, she decided she wanted to take it a step further and created The Creative Co-Operative. She wanted to research the experiences of women of colour in the start-up community, but when she approached two high-profile women in tech (who she declined to name) for support, she was questioned on why it was worth researching the experiences of women of colour.

Her funding, in the end, came from the federal government’s Women in STEM and Entrepreneurship (WiSE) grant program.

Ms Ashraf’s experience is not uncommon. The Creative Co-Operative surveyed more than 100 black women and women of colour for its new report, and discovered a quarter of respondents believed racial discrimination had been a barrier to accessing funding.

In reality, Ms Ashraf expects this figure to be higher, saying many women felt conflicted in sharing their experiences publicly, while either having established ties to the VC community, or trying to raise capital.

The report also found that the most common source of funding (57.1 per cent) for early stage BIWOC founders was their own cash, followed by government grants. Only 9.5 per cent of BIWOC founders who had raised funding had done so via venture capital.

In 2021, of the 25 per cent of BIWOC founders surveyed who managed to raise funding, 61.7 per cent raised under $50,000 and only 23.8 per cent raised more than $500,000 (up from only 4.8 per cent in 2019).

The Creative Co-Operative is launching a new program, Anyone Can, backed by the federal Department of Industry, Science, Energy and Resources, Glow Capital, GiantLeap, Scale Investors and more to support 75 BIWOC founders to start their businesses.

Women of colour who have successfully raised large rounds and are considered trailblazers include Canva’s Melanie Perkins, Mr Yum co-founder Kim Teo, Hyper Anna co-founder Natalie Nguyen, HealthMatch’s Manuri Gunawardena, Reejig co-founder Shujia Zhang and Expert360’s Emily Yue.

“Most people don’t even know what intersectionality means,” Ms Ashraf said.

Intersectionality is the ways in which different aspects of a person’s identity can expose them to overlapping forms of discrimination and marginalisation.

Ms Ashraf said at least three things needed to happen to move the needle and create a more diverse start-up scene – for anyone in decision-making roles to undergo training to understand intersectionality and how to address the challenges experienced by people of colour, for investors and leaders to work with organisations connected to minority communities to help encourage more women of colour into the ecosystem and, in the long term, for more women of colour to be elevated in investing roles.

“You can’t be what you can’t see.”