Supporting Black-Led Tech: A Key Pillar for A Positive Economic Outlook in Canada

Canada is a nation of vast beauty and rich diversity. Our mountain ranges, open prairies, and expansive coastlines are matched by an eclectic population, bringing together diverse cultures, people, and ideas. This diversity, a source of endless opportunities, is a strength we must continually nurture, especially in sectors like technology. 

While we have made significant progress in embracing our diversity, we recognize there is still a considerable journey ahead. This is particularly true in ensuring equitable opportunities for historically marginalized communities in the technology space.

Navigating the Funding Landscape: A Continued Challenge for Black Tech Entrepreneurs

Despite a promising increase in funding for Black entrepreneurs in 2021, recent trends paint a different picture. In 2021, Black founders saw a hike of 281% in fundraised amounts from the prior year. However, by 2023, this figure plummeted: the adverse market conditions we saw at the end of 2022 led to an overall drop in VC funding. With a 45% decrease in financing, Black-tech entrepreneurs were disproportionately impacted and never recovered.

In 2023, funding to Black entrepreneurs was at a historic low of 0.48% of total venture capital funds deployed in the US. In Canada, the situation mirrors these statistics, revealing systemic barriers that prevent Black entrepreneurs from accessing similar levels of capital as their peers.

Black tech entrepreneurs frequently confront biases from investors, leading to their ventures being overlooked more often than warranted. Moreover, historical barriers to full economic participation lead to too few instances of intergenerational wealth, limiting the ability for entrepreneurs to “bootstrap” or to go to friends and family for financial support. 

A report commissioned by the African Canadian Senate Group and Senator Colin Deacon, highlighted that 75% of Black entrepreneurs would not know who to turn to borrow $10,000. From a loan standpoint, high rejection rates of nearly 50% of applicants, coupled with concerns about above-market interest rates, further illustrate the financial hurdles Black entrepreneurs face. These statistics not only highlight individual struggles but also underscore the broader economic implications, including lost opportunities for innovation, job creation, and revenue growth.

Seeing Giants Stumble: An Experience in Disappointment

In our journey advocating for a more inclusive and diverse tech industry in Canada, we have witnessed giants in our industry struggling to raise capital, despite their undeniable potential and accomplishments. We’ve seen open doors at social and visible functions, only to find those same doors closed when it comes to long-standing economic partnerships. We saw renowned professionals, artists, athletes, and environmentalists come to us for funding, and we saw entrepreneurs with decades of experience and deep network as well. While we know they came to us because of a match in the values we share, we also saw the struggle faced in a market that was never convinced that success really could look like them.

Creating a System that Cares: A Call for True Investment

We believe systematic solutions are needed for systemic challenges. Our vision for sustainable change in Canada’s tech sector is rooted in unity and collective progress. The path forward is one on which we advance together, ensuring that every talented innovator, irrespective of their background, is included in our journey towards a more equitable future. This is about collaboration and shared effort, calling for the involvement and support of all sectors of society. This involves concerted efforts from financial institutions, philanthropic organizations, government bodies, corporations, and individual investors. We must align and collaborate towards clear goals to intentionally dismantle systemic barriers. From implementing supportive policies to fostering representative leadership, here’s how different stakeholders can contribute:

1. Inclusive Funding Policies: Continuing to encourage financial institutions and venture capitalists to consider equitable funding practices will create more opportunities for Black-led ventures. This should be done with a long-term results framework.
2. Educational Reforms: By integrating stories of Black success and history into the Canadian academic curriculum, educational institutions can play a key role in inspiring the next generation of Black entrepreneurs, offering them relatable role models, and in decreasing unconscious bias for their peers.
3. Corporate Accountability and Diversity: Companies, especially in the tech sector, should strive to remove biases in their recruitment process. Promoting tools that support anonymized assessments, focusing on productivity and results should be encouraged. 
4. Government Support and Policy Making: Through the development and implementation of policies that bolster Black entrepreneurship, governments can play a crucial role in creating an enabling environment that supports Black entrepreneurs and encourages investment in Black-led businesses.
5. Community Engagement and Mentorship: Keep supporting existing networks and mentorship programs that bridge gaps in experience and opportunities for Black entrepreneurs. These initiatives will continue to flourish with the support and involvement of industry leaders and community organizations.

All these measures are ultimately about creating a system that cares, a place where no one feels they are being watched with expectations of failure but rather encouraged with a real belief that excellence will happen. It’s not about hand-holding but instead, it’s about democratizing care and connection, which links to a level of discretion that exists in business, as in life, which is applied when we see someone we care about. 

While many proposed solutions have started to be put in place, they often lack the intentionality and genuine commitment needed to effect meaningful change. Too often, these efforts are driven by short-term metrics and performative gestures rather than a genuine desire to address systemic inequalities. We must recognize that dismantling entrenched systems of disadvantage requires a long-term vision and sustained commitment. Patience is paramount, as progress may not be immediately apparent and may require a 10 to 15 year framework rather than a two to three year one. This is especially true in the light of the weight of historical disadvantage that continues to shape the experiences of Black entrepreneurs today.

Leading by Example

As advocates for change, we recognize the importance of leading by example. At our level, we are taking intentional steps to support the ecosystem and foster a more inclusive tech industry. Our commitment goes beyond words; it is reflected in tangible actions aimed at empowering Black entrepreneurs and addressing systemic barriers.

One such initiative is the establishment of the largest Black-led venture capital fund in the country, with a fund size of CAD 22.3 million. This fund represents more than just financial support; it is a symbol of our belief in the potential of Black-led ventures and the importance of investing in diverse talent. By providing not only capital but also mentorship and support, we aim to create a nurturing environment where Black entrepreneurs can thrive and succeed.

We are deeply aware of the power of decision-makers and check-writers in deciding the flow of capital. For a more inclusive ecosystem it is important to increase the representation of Black investors now and for generations to come. We launched our BKR Capital VC Fellowship with the aim of increasing the number of Black investors at all levels and help advance the careers of those currently in the industry.

Additionally, we are actively involved in initiatives like DMZ’s Black Innovation Programs and The Black Entrepreneurship Knowledge Hub. These programs complement our vision for a more inclusive tech industry by providing resources, mentorship, and networking opportunities to Black entrepreneurs. By leveraging our expertise and resources, we are working to dismantle systemic barriers and create a more equitable ecosystem for all.

Our commitment to supporting Black entrepreneurs extends beyond our own initiatives and transcends Canadian borders. We are actively engaged in advocacy efforts, pushing for policy changes that promote diversity and inclusion in the tech sector. By amplifying the voices of underrepresented communities and advocating for systemic change, we are striving to create a more just and equitable future for all.

Canada’s Future Economy: One of Inclusion-Driven Growth?

The future of Canada’s tech industry, its capacity for innovation, and its global competitiveness depend on our ability to foster an environment where talent from every background can thrive. 

Each step we take towards supporting Black tech entrepreneurs is a stride towards harnessing our full national potential. From job creation, general increase in purchasing power, inclusive innovation and better societal cohesion, the economic outlook of inclusion in a country built through immigration is highly attractive. Now, more than ever, we need every sector from government, business, education, and communities to stay united and committed to this endeavor. It’s time to move beyond acknowledgments or performative actions and into the realm of tangible, sustained action.

As we move from envisioning to building a future of equitable opportunity in technology, our fund stands as both an invitation and a challenge. We invite others to join us in this critical mission. By working together, we can forge a Canadian tech industry that is not only vibrant and flourishing but also a true reflection of our nation’s strength in diversity.