Access to Capital
in Black Communities
Tuesday, February 28, 2023
Lise Birikundavyi, CFA
Managing Partner, BKR Capital
Victor Beausoleil
Executive Director, SETSI
Shiemaa Khogali, PhD
Data Science Product Associate, New Power Labs
Yonis Hassan
CEO, Justice Fund Toronto
Lise Birikundavyi from BKR Capital, Victor Beausoleil from SETSI, and Yonis Hassan from Justice Fund Toronto joined Shiemaa Khogali of New Power Labs for a New Power Talks session on the realities, barriers, and opportunities of capital flows to Black communities.
2020 was a year when many conversations were happening around supporting Black communities in Canada. A few years on, is capital flow to Black communities improving?
We asked attendees to weigh in on how capital has flowed to Black communities since 2020. Forty-eight percent said flows had improved, while 36% thought things were about the same, and 16% believed Black communities are getting less capital now than in 2020. In reality, while comprehensive data are lacking, we know that Black Canadians are still facing barriers to getting capital.
“While venture funding in the U.S. overall dropped nearly a third in 2022 — from about $337 billion to roughly $214 billion — Black-founded startups were hit disproportionately by the decline, Crunchbase data shows. Such startups saw their share of the market drop from 1.5% in 2021 to only 1.1% last year.” – Crunchbase.
In speaking to our expert panelists, each working in and with Black communities across philanthropy, venture capital and ecosystem building, five big ideas came up:
1. There has been movement, but it is not enough.
One point of progress since 2020 was seeing more collaboration between organisations that used to work in silos. However, Lise commented that when BKR Capital was launched in 2021 she was the only Black female fund manager. While being first is a source of pride, it also begs the question, “Why?”
Yonis commented that although we’ve seen more initiatives, they are mostly incremental so can’t address core issues of Black communities. These initiatives mostly flow a tremendous amount of capital into the hands of people who lack the lived experience and the history of these communities. The burden is then put on Black leaders to educate and equip beneficiary communities to help access this capital.
Victor shared that most initiatives around Black communities are based on guilt, and we cannot build from guilt. Instead, we need to focus on economic reconciliation and shifting power to the people who remain on the margins of the economy. It is as simple as supporting Black-led funds like BKR capital. It is as simple as amplifying and enabling Black and Indigenous fund managers. Impact investing has the power to transform realities, but we are not unlocking that power yet.
2. Government support is important, and needs to be consistent.
Recently, the Hon. Ahmed Hussen, Minister of Housing, Diversity, and Inclusion announced a historic $200M Black-led Philanthropic Endowment Fund to be administered by the Foundation for Black Communities. This is historic - it is the largest amount ever dedicated to Black-led and Black-serving organizations - but it can’t be seen as checking off a box. It is a first step of many to ensure that Black-led, Black-mandated, and Black-serving organizations have the opportunity to amplify their social impact.
In order to ensure that the movement is sustained, we need consistent, organized support for economic mobility. Victor mentioned the Indigenous community as an example: Raven Indigenous Capital Partners, North America’s only Indigenous-led and owned impact investment firm, has recently closed at $100M. This is thanks to their brilliant leadership and also generations of Indigenous communities working to build the foundation.
3. Philanthropy can play a transformative role.
Yonis shared that, while $200 million dollars is a substantial commitment, it will not solve inadequate housing, food insecurity, violence, and generational poverty in our communities. We need to allocate billions of dollars in investment across Canada – and philanthropy is well-poised for this opportunity, with over $120 billion in assets.
The fact is that there is growing donor fatigue. Funders – whether impact investors or philanthropic foundations, can be hesitant to fund an organization unless it’s already backed, particularly when it comes to Black communities. Philanthropy needs to be comfortable with taking risks and being proactive, instead of responding to an outrage. The government can play a role in encouraging philanthropy to do this. Justice Fund is calling for a philanthropy reform via legislative changes to the Income Tax Act, which includes a call for all Canadian foundations to redirect their assets towards 100% impact investments by 2030. Changes in legislation, bylaws and governance structures are essential to make sure recommendations and solutions are backed.
4. The private sector holds tools needed for change.
On top of the $120 billion dollars in philanthropy available in Canada, there is $8 trillion dollars in private equity and venture capital in North America. Lise sees an opportunity here: private equity and venture capital are about building products that enhance value, and she believes investors will flow capital towards companies based on that value, no matter what the founder’s skin color is.
The $200M endowment creates an opportunity to flow capital to Black communities by supporting Black entrepreneurs, using the private sector as a lever for economic change. From that perspective, there is an alignment of both empowering our community and amplifying value and impact — and so we can be hopeful.
5. Transparent and inclusive data are crucial in enabling change.
Canada lacks data specific to entrepreneurs of colour. Lise mentioned that BKR Capital is working with what is available, which is data from the US or from their own network. Another challenge is that data have been weaponized against communities of colour. Whoever collects the data, analyzes the data, stewards the data, and governs the data ultimately has the power. One way SETSI is helping tackle this, is through work with Tamarack Institute and the Indigenous Peoples Resilience Fund at the Canadian Center for Nonprofit Digital Resilience to decolonize data. Similarly, New Power Labs is working to build a movement centering access to data and pushing accountability and transparency, which we see as crucial in supporting equity, diversity, and inclusion in capital flows. We hope you’ll join the movement.
Looking for resources in support of Black entrepreneurs?
SETSI hosts a series relevant to leadership, capacity building, knowledge sharing and monthly study groups on various topics from climate action to social finance. Follow SETSI on Twitter, LinkedIn, and Instagram to learn more. BKR Capital also shares resources on their website, and hosts a series for entrepreneurs seeking to learn about venture capital on their social media.
Other resources:
The Afro Caribbean Business Network
Black Business and Professional Association
The Canadian Black Chamber of Commerce
GrantConnect: A platform that connect organizations with granting opportunities. Free with a Toronto Public Library Card.
Happly.ai: A platform that matches entrepreneurs to funding opportunities using AI.
New Power Match: A platform that matches social impact organizations with impact investors.
