female tech entrepreneurs, start ups

The past month has seen the business world go through some unprecedented changes thanks to the coronavirus pandemic.

While all corners of the economy have been impacted, small businesses and start-ups have had to innovate dramatically and seek support, in a bid to ride the COVID-19 wave.

Sarah WernérIn this piece, Sarah Wernér writes an open letter to Chancellor of the Exchequer, Rishi Sunak and puts to him whether start-ups from under-represented founders will survive COVID-19.

An Imperial College London alumnus, Sarah spent years in the pharmaceutical industry providing strategic insights for multiple life changing cancer and immunology drugs. She is a keen problem solver with a strong affinity for data science and analytics. She is currently applying her skills as the co-founder and CEO of Husmus.

Husmus is built for landlords who are or want to self-manage and their tenants. We focus on removing logistical burdens & improving experiences. We achieve this by automating workflows (such as tenant referencing and deposit protection) and connecting landlords, tenants & service providers.

Dear Rishi Sunak,

I’m a black woman in tech. Are you aware that women like me get only 0.02 per cent of available startup funding (Source: Jane VC). It’s no wonder that minority female CEOs are rare especially in tech. What fool would chance it given those odds?

Any founder will tell you that fundraising is extremely hard. And that’s when you have the ‘network’ to make introductions. But let’s say you don’t, let’s say you are like the majority of minorities who boldly go after their entrepreneurship dream with nothing but wit and grit. How do you make it work? The answer: with great difficulty. Most of us start our dream businesses as a side hustle. However, novel tech is expensive to develop, sustained self-funding is highly unlikely. Bank loans are also out of the question, startups are considered too risky. There are of course angels and venture funds some of which even focus on female or minority businesses. However even these can be as elusive and unhelpful as the rest. Just last week I was told by one such firm that although they do invest in women tech business just not my kind of tech business. 

In Feb 2020, I happened to be in the middle of a funding round. Having raised half of the money I needed, I started to believe I could actually buck the trend. Become one of the lucky few minority CEOs to raise money and lead a well-funded startup. Then the UK COVID-19 lockdowns began. The improbable just became virtually impossible. In one way, I’m lucky my investors haven’t abandoned me. But who else is still willing to invest in already risky early stage startups especially a tech one run by a black woman? The odds are decidedly not in my favour. 

With a sense of pride, I’ve watched you rise to the occasion and offer financial help to the country. My friends and I have discussed how well you are performing in a new job in an impossible situation. As you announce measure after measure that we don’t qualify for we acknowledge that at least you are there and you are trying. On the 17th of April I turned on the BBC to watch the coronavirus updates and there you were talking about support for startups. I listened with excitement, could there be finally be something for the likes of me? Then came the crushing blow. It seems not. There is a minimum £250K prior investment eligibility criteria. This all but guarantees virtually all early stage startups will be excluded. Especially those lead by minorities who almost never raise the levels of money their fellow entrepreneurs do.  

Your Future fund is designed for scaling up companies. 

Let me anticipate you, “there are options for ineligible startups from Innovate UK” you say.

“A further £750m of grants and loans will also be made available for Innovate UK to “accelerate” up to £200m in payments to 2,500 existing customers, while £550m will also be made available to increase support to these firms. About 1,200 hi-tech firms in Britain not in receipt of Innovate UK funding will be offered £175,000.”

As you mention only companies that have already secured the difficult to come by Innovate UK grants or loans will be eligible. Additionally, there is no clarity on who ‘these 1,200 high tech firms not in receipt of Innovate UK funding’ are. I have no confidence that my company is among them. 

Additionally, Rishi, have you considered that it is likely to be the same players eligible for business interruption loans who qualify for the startup funding?  Many growth stage startups and large companies with significant revenue receive money from Innovate UK for their special projects and will likely get even more through access and eligibility to more than one scheme. 

I personally loathe critics who offer no suggestions for improvement so let my outline some of mine:

  • Recognise that not all startups are at the same stage and each stage will need different types/levels of support
  • Do away with the £250k previous funding requirement. It will kill the early stage startup funnel and potentially block innovation in the short term. Moreover, if very early stage startups pack up, there will be little for angels and small VCs to invest in the next couple of years.
  • Match funding for SEIS eligible companies, minimum £50k.
  • Match funding for EIS eligible companies, minimum £150k.

Offer grants for bootstrapped micro startups with less than 5 employees. Most of these are very lean operations, as little as £15K will make a difference.

Work with white hat players to determine fair terms for founders and their companies. Tax payer money shouldn’t be used to propagate unfair terms.

If none of these suggestions are palatable, I hope you will at least collect demographic data of the companies you choose to help so when the dust settles, we can take stock of just how much help each portion of society received from your various stimulus packages. 

As for me, I’ll do what women like me have always done. I’ll roll up my sleeves, gather all the strength within me and keep making those calls until I find someone out there prepared to take a chance on my vision. I can’t let my team, my customers or myself down.