Lola Adeyemi, a Nigerian entrepreneur, poses with a few of her African soup products, which are now sold in Sobeys and other Canadian grocery retailers, in Toronto on Friday, February 5, 2021. THE CANADIAN PRESS/Nathan Denette

Lola Adeyemi, a Nigerian entrepreneur, poses with a few of her African soup products, which are now sold in Sobeys and other Canadian grocery retailers, in Toronto on Friday, February 5, 2021. THE CANADIAN PRESS/Nathan Denette

‘I don’t want to be a unicorn’: Black founders struggle to raise venture capital

Quantifying how much less funding Black business owners get is tough because it’s seldom tracked in Canada

When Lola Adeyemi started a company making chickpea stews and roasted carrot soups like the ones she grew up eating in Africa, she was expecting an uphill battle.

The food industry has notoriously low margins and fighting for grocery store space alongside longtime household brands can be difficult — and that’s before one factors in Adeyemi’s race.

The Toronto woman, who was raised in Nigeria, dipped into savings, landed loans and grants and turned to her husband’s small consulting business to start It’s Souper.

Her products can be found on shelves at Sobeys, McEwan and Foodland Ontario, but Adeyemi wishes it was easier for entrepreneurs like her to find support.

“I don’t want to be a unicorn. I don’t want to be the only Black female and immigrant entrepreneur here,” said Adeyemi, as she drove around dropping off samples to potential customers.

“I want others to be here too.”

Her experience is common for Black entrepreneurs in Canada. They often find themselves underfunded and unsupported by venture capitalists, who pour money into companies run by people in their existing networks, which are predominantly white and male.

Quantifying how much less funding Black business owners are receiving is tough because such metrics are seldom tracked in Canada, but entrepreneurs and investors estimate it to be on par with — or even worse than — the U.S.

Less than one per cent of the US$543 billion in venture capital offered in the U.S. between 2015 and 2019 was given to Black and African American founders, according to business information platform Crunchbase. That’s just US$4.9 billion.

Meanwhile, only two of 300 grants the Canadian government offered women-owned businesses went to Black-run companies in 2018, said Amoye Henry, the co-founder of Pitch Better Canada, which helps under-represented communities access capital.

Pitch Better has so far offered pitching advice to 306 Canadian companies and helped 50 find funding.

“People want to give money to and invest in people and things they’re very comfortable with, that look like them and that they can trust will get their money back,” she said.

Black business owners without university or Ivy League educations lack connections with wealthy alumni networks that offer ties to Bay Street or Silicon Valley.

The few that secure some funding are often resistant to taking it because they can’t rely on family, friends or banks if they run into trouble, she added.

“They just feel like they won’t be able to pay the debt back … white people will just take on the debt and try anyways,” Henry said.

She and Pitch Better Canada co-founder Adeela Carter have had to plead with Black founders to take sums as low as $150,000.

“I remember saying I will help you find the money (if it comes to that), just take the money,” said Henry, of one situation.

“(The founder) was just like ‘I don’t want to ruin the opportunity for future black founders, if I take it and I can’t pay it back.’”

Isaac Olowolafe Jr. has worked with early-stage financing since 2015, when he noticed a dearth of Black founders in Canada and started Dream Maker Ventures, an investment arm for his real estate-focused asset management firm.

By 2019, he was also running the Black Innovation Fellowship, a Ryerson University-backed initiative to support Black-led startups.

However, he’s an anomaly. A 2019 study from the Canadian Venture Capital Association showed that only eight partners at the 145 private equity firms surveyed were “visible minorities.”

Black people made up 3.5 per cent of Canada’s population in 2016, according to the latest figures from Statistics Canada. Visible minorities made up 15.6 per cent of the population that year.

Of the 132 partners at surveyed venture capital firms, the association found only 24 partners or 18 per cent were visible minorities.

The survey did not specify how many of those partners were Black, but Henry and Olowolafe Jr. said there are few in Canada and that’s part of the problem.

Many of the Black entrepreneurs behind funds keep a low profile, said Henry, because they only have so much money to disperse and they worry that advertising their willingness to invest in the community will make them a magnet for too many pitches they can’t support.

But even getting to that point is tough, Olowolafe Jr. pointed out.

Olowolafe Jr. believes raising venture capital for Black entrepreneurs relies on relationships because investors will write cheques for people they know and trust.

“It’s not about recreating the wheel, but basically doubling down on what works for other communities and bringing it back to the Black community,” he said.

Addressing unconscious bias is also part of the solution, said Ariel Gough, the co-founder of Nova Scotia-based fragrance company Bailly.

“Everybody has unconscious bias based on their experience, how they grew up and who they were around, but it’s important we recognize that we may not be judging entrepreneurs solely on their ideas or their objectives or their potential,” she said.

ALSO READ: Reclaiming Hogan’s Alley: Society pitches new life for historic Black Vancouver area

Venture capitalists, she said, want to see traction, but getting there takes money most Black founders don’t have.

“It can be very discouraging coming out of those meetings,” Gough said. “You often feel like all the hard work you have put into your business has not got you anywhere.”

Adeyemi noticed funding opportunities have slowly cropped up for Black entrepreneurs after the death of George Floyd in police custody last year.

As companies pledged to help Black communities more, she found a $75,000 grant, but she’s always conscious that the momentum incidents like Floyd’s death created can easily dissipate.

That would be a shame, she said, because the benefits of investing in Black entrepreneurs are widespread.

“When you empower people that are marginalized or even just a black community, you’re empowering the whole country.”

Tara Deschamps, The Canadian Press


Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

Black History Month

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

COVID-19. Black Press file photo
No new COVID-19 cases for Nakusp

Our community has not had a case since January; has only had three in total since pandemic started

A nurse performs a test on a patient at a drive-in COVID-19 clinic in Montreal, on Wednesday, October 21, 2020. THE CANADIAN PRESS/Paul Chiasson
36 new cases of COVID-19, one death in Interior Health

The number of active cases in the region is at 366

A health worker holds a vial of AstraZeneca vaccine to be administered to members of the police at a COVID-19 vaccination center in Mainz, Germany, Thursday, Feb. 25, 2021. (Andreas Arnold/dpa via AP)
43 new COVID-19 cases in Interior Health

368 cases in the region remain active

A member of the Avalanche Canada South Rockies field team gathers important snowpack data that is used to produce daily avalanche forecasts for the region. Photo by Jennifer Coulter.
Warming temperatures increase avalanche risk heading into the weekend

Warm temperatures impact conditions, human behaviour

A nurse performs a test on a patient at a drive-in COVID-19 clinic in Montreal, on Wednesday, October 21, 2020. THE CANADIAN PRESS/Paul Chiasson
Interior Health reports 16 new COVID-19 cases

423 cases remain active in the region

B.C. Health Minister Adrian Dix and provincial health officer Dr. Bonnie Henry head for the B.C. legislature press theatre to give a daily update on the COVID-19 pandemic, April 6, 2020. (B.C. government)
B.C. nears 300,000 COVID-19 vaccinations, essential workers next

564 new cases, four deaths, no new outbreaks Thursday

Walter Gretzky father of hockey hall-of-famer Wayne Gretzky waves to fans as the Buffalo Sabres play against the Toronto Maple Leafs during third period NHL hockey action in Toronto on Tuesday, Jan. 17, 2017. THE CANADIAN PRESS/Nathan Denette
Walter Gretzky, father of the Great One, dies at 82

Canada’s hockey dad had battled Parkinson’s disease and other health issues

Kelowna General Hospital (File photo)
Second death reported in Kelowna General Hospital COVID-19 outbreak

A total of seven cases have been identified at the hospital: six patients and one staff

Municipal Affairs Minister Josie Osborne speaks in the B.C. legislature, March 4, 2021. (Hansard TV)
B.C. Liberals, NDP sing in harmony on local election reforms

Bill regulates paid canvassers, allows people in condo buildings

(National Emergency Management Agency)
No tsunami risk to B.C. from powerful New Zealand earthquake: officials

An 8.1 magnitude earthquake shook the north of New Zealand Thursday morning

(AP Photo/Richard Vogel, File)
Pandemic stress, isolation key factors as to why Canadians turned to cannabis, alcohol

Study found that isolation played key role in Canadians’ substance use

Grand Forks’ Gary Smith stands in front of his Church of the Flying Spaghetti Monster float. Photo: Submitted
Grand Forks’ Flying Spaghetti Monster leader still boiling over driver’s licence photo

Gary Smith, head of the Church of the Flying Spaghetti Monster of B.C., said he has since spoken to lawyers

A Cowichan Valley mom is wondering why masks haven’t been mandated for elementary schools. (Metro Creative photo)
B.C. mom frustrated by lack of mask mandate for elementary students

“Do we want to wait until we end up like Fraser Health?”

Most Read