£5M Inaugural Fund Launched by Black Seed to Fuel Innovation and Invest in Black Founders

Black Seed, a British early-stage venture firm, has successfully raised £5 million ($6.2 million) as part of its first fund dedicated to supporting Black founders in the country. The funding round was led by asset manager M&G Investments, with participation from Atomico and Molten Ventures. The firm now aims to raise an additional £5 million to complete the round.

The primary objective behind the establishment of Black Seed is to tackle the significant lack of funding that Black founders experience in the U.K. This disparity was highlighted by a report from Extend Ventures, which revealed that Black founders in the country received a mere 0.24% of all venture capital funds between 2009 and 2019. Additionally, the report emphasized that only 10 Black British women were able to secure any funding during that period, painting a bleaker picture compared to the United States.

This chronic underfunding has historically resulted in talented Black entrepreneurs seeking opportunities in the U.S., where funding prospects have been comparatively more favorable. In addition to addressing this issue, Black Seed also aims to reduce the number of Black businesses in the U.K. that rely on self-funding, which currently stands at a staggering 88%. The firm’s goal is to bring this figure down to at least 50%.

Black Seed’s fundraising efforts and its commitment to supporting Black founders in the U.K. signify a positive step toward fostering a more diverse and inclusive entrepreneurial ecosystem in the country.

“We exist as a tech fund and a community,” Karl Lokko one of the founding members said. “We exist to bridge that gap and give Black founders inclusion.”

Cyril Lutterodt one of the founding members  highlighted the firm’s commitment to taking swift action by providing financial support to drive change, recognizing that many Black founders in the U.K. face a situation where they receive excessive mentorship but insufficient funding. He stated that Black Seed has established a strong pipeline of talented Black entrepreneurs who are prepared and poised for investment. The firm plans to make a minimum of 10 investments in the next three years and has a reserve fund set aside for follow-on investments.

Black Seed’s primary focus will be early-stage investing, serving as a vital source of funding akin to a “family and friends” round for those who lack access to angel investors or the traditional support received from their networks. It stands as one of the few funds in the U.K. that exclusively concentrates on supporting Black founders. Although Black Seed remains industry-agnostic, Lutterodt expressed particular interest in deep tech, healthcare, and AI.

In addition to its investment activities, Black Seed actively engages with the community by hosting events at its office in Brixton, a neighborhood in south London known for its vibrant Afro-Caribbean population. The firm organizes the Brixton Startup Weekend and the pitch competition called Lyan’s Den, providing platforms for aspiring entrepreneurs to showcase their ideas and gain exposure in the startup ecosystem.

Originally scheduled to unveil the £5 million raise in late 2020, the company encountered obstacles related to regulatory compliance, resulting in its launch being pushed to 2021.

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