Former Goldman Sachs CEO Ayesha Ofori was confident that investors would be interested in funding her investment platform startup – then came the wall of rejections.

Some of the venture capitalists who gave Ofori’s female-focused financial investment platform Propelle the cold shoulder ultimately rejected her, saying she lacked experience. Ofori points to her background at Morgan Stanley, Goldman Sachs and her MBA from London Business School.

“Raising donations is phenomenally difficult,” Ofori told CNBC. “I try not to think about it because it brings you down… It’s like your gender and the color of your skin are the reason you don’t progress as quickly as other people.”

Ofori was one of the few black founders in the UK to eventually secure funding for their company. However, Black founders received just 0.23% of venture capital funding overall in 2018, according to data from Extend Ventures. This minority group market share has barely increased since then.

The UK tech sector saw record investment levels of over $40 billion in 2021. Of this, the value share of Black founders rose to a high of 1.13% as companies’ diversity and inclusion efforts surged in the wake of the Black Lives Matter movement. The investment value represented by the group has since fallen to 0.95% in 2023, according to Extend Ventures data.

Ofori believed she “took everything” that VCs wanted from founders.

“In speaking to people behind closed doors, I was told by the public that some black women were given the opportunity. They have raised VC funding. It failed and did poorly, and some of these particular VC firms don’t do that.” “I’m willing to stop taking the risk,” Ofori explained.

According to Extend Ventures, only 13 Black women raised venture capital between 2019 and 2023, compared to over 3,700 white men.

Like other black founders in the UK, Ofori is trying to buck the trend of declining funding by targeting high-profile investors and taking a more community-focused approach that includes support from family and friends.

CNBC spoke with several founders and VCs who noted that Black business leaders often face systemic challenges, ranging from racial stereotypes to an overall lack of diversity in the industry.

Sarah Wernér, who co-founded real estate management company Husmus with her Swedish husband Mattias Wernér, said some VC firms adhere to quotas and reject black founders once they reach their threshold. Other VC firms will pit Black founders against each other to compete for the limited funds allocated to them, Wernér said.

“They pit people who are already in need against each other. “Pitting black people against each other and fighting for the one spot in your portfolio that is assigned to a person of color is ridiculous,” she said.

Wernér, who said she is the face of Husmus, told CNBC that her generic-sounding name has often opened doors for her because people don’t immediately recognize her skin color. She also said that she was able to secure meetings with high-profile investors using her white husband’s email address.

Karl Lokko, founder and managing partner of Black Seed, a Black-led startup VC fund, told CNBC that more diversity at the senior level of VC firms is needed to overcome these biases.

“If the ICs (investment committees) have a more diverse perspective, the proposals that are evaluated and decided upon can be more fully considered,” Lokko said. “So yes, more diversity, but more diversity is actually in the sea of ​​decision-making when it comes to where money is distributed.”

At the end of October, thousands of students, VCs, CEOs and diversity, equity and inclusion (DEI) experts gathered in north London for the fifth edition of Black Tech Fest – a festival hosted by former Google employee Ashleigh Ainsley and tech executive Dion from Silicon Valley was organized by McKenzie.

A recurring theme at this year’s Black Tech Fest was the lack of available data representing the proportion of funding and support ethnic minority founders receive. McKenzie described Europe as a “data desert”.

In response to the lack of data and representation in their industry, McKenzie and Ainsley founded Colorintech to foster a new community for people of color. They say underrepresented founders have raised more than $50 million in funding since their program launched and the community has grown to more than 60,000 people.

“We wanted to shine a spotlight and give a platform to people in the industry who are underrepresented,” McKenzie said.

They have worked with some of the biggest names in the industry, such as the owner of Facebook Meta, Google, PwC and JPMorgan.

Google also supported Ofori von Propelle and Wernér von Husmus and offered funding through its Google for Startups Black Founders Fund. Ofori, who received an initial investment of $100,000, said joining Google for Startups was a “catalyst” for money to flow into the country.

Even when the people who had previously rejected her showed interest, Ofori decided to focus on tapping into her own community and network to move forward.

She also reached out to some of her former colleagues at Goldman and brought on board high-profile investors, including women entrepreneurs. One of Propelle’s investors is former Goldman partner Stefan Bollinger, the current CEO of Julius Baer.

Wernér referred to this support as a “friends and family” round – a type of early-stage fundraising where founders ask friends and family to invest in their company. She said her first check for her venture came from a college friend who offered her £10,000, which encouraged her to reach out to other acquaintances.

“These are the people who know you. You were in the trenches with them. You spent the whole night in the library with them. They know you and they trust you, and they gave you money out of their pocket. “And honestly, there’s nothing more humiliating than that,” she told CNBC.

A surge in diversity and inclusion programs in 2020, when the killing of George Floyd led to protests and racial unrest, has not translated into long-term investment in the Black community — a failure that is to the detriment of the tech sector, according to Colorintech Ainsley’s McKenzie.

A more diverse workforce leads to “better products, better teams and ultimately more revenue,” McKenzie said, adding that more inclusive employers allow companies to attract the “best talent.”

“If we think about the bigger picture of making Britain bigger and making us a more productive country, we can’t do that by widening the productivity gap between certain social groups,” Ainsley said, stressing that while these social groups are minorities could, they are not “insignificant”.

Four years after the Black Lives Matter moment, the mood around diversity efforts has changed. Several companies including McDonald’s, Google, ford, Lowes And Walmart have scaled back their diversity efforts in the U.S. for reasons ranging from cost-cutting to political pressure. Donald Trump’s new White House administration has raised concerns about the future of DEI amid the president-elect’s proposals to eliminate federally funded diversity programs.

In the UK, Labor’s pre-election pledge to reduce barriers to equal opportunities with the introduction of a racial equality law stands in stark contrast to the prospects in the States. While the rollback of corporate DEI programs may be less common in the UK, the investment value represented by Black founders in the country has not yet exceeded 1%, as it did in 2021 and 2022, according to Extend Ventures.

Ainsley and McKenzie said DEI has been “politicized” and “weaponized” to silence the efforts of organizations like Colorintech.

“For better or worse, DEI will certainly be a focus of the next administration. We’ve heard a lot of anti-DEI rhetoric leading up to the election and planned actions once we’re in office, but ultimately, business leaders will need it.” “They must decide whether they, their employees and shareholders recognize the value of diversity, inclusion and Recognize equity or whether the alternative is better for creating value and attracting the best talent,” said McKenzie.