Why Black people don’t start businesses (and how more inclusive innovation could make a difference)
by Isak Nti Asare
When the UK Prime Minister launched the Race Disparity Audit in October 2017 she said “I absolutely, passionately believe that how far you go in life, should be about your talents and your hard work and nothing else” She went on to say that “[...]when one person works just as hard as another person— and has got the same ambitions and aspirations—but experiences a worse outcome solely [on] the grounds of their ethnicity, then this is a problem that I believe we have to confront”. This is a nice sentiment, but the results of the audit didn’t tell us anything that we didn’t already know. Several reports and studies have already shown widespread societal discrimination that has created multiple layers of disadvantage across society—Black people being particularly affected. Thus, the real question is what is the government going to do about this problem? It is nice to collate all of the data, but collecting data that already existed is not the same as crafting policy to address—or to use the Prime Minister’s word’s— confront, the issue. A useful application for this data would be to explore how different areas of discrimination interact. In order for us to craft policy that improves outcomes, we need to understand this.
Take for example the question of why more black people don’t start businesses. According to the audit, in 2016, Black workers were the least likely to be self-employed at 11%. This compares to 16% of white workers. My hypothesis as a Black business owner myself is that a large number of black businesses are in low-barrier sectors such as care work or cleaning. I strongly suspect that the number of Black-run tech startups for example, would show a bleak picture for those overall ethnicity statistics. Why is that?
Studies suggest that the main reasons Black people do not start businesses are lack of access to finance, being without resources to provide community and advice, no mentoring models, and fear. Furthermore, racism has paralyzing effects on groups of people. It is human nature to avoid rejection. A would-be Black entrepreneur may not even approach a bank for funding, or a lawyer for advice, if they have reason to believe that they will be rejected or receive a lower level of service on the basis of the colour of their skin. In all of this, we see that the interaction of areas of discrimination result in yet another area of underrepresentation. Namely, the fact that minorities are often overlooked for promotion, are underrepresented in leadership roles, or are fewer in number in key positions such as solicitors or accountants, results in less diversity in self-employment. Add this to the underwhelming numbers of young Black people reading for degrees in areas of high growth such as technology, and you have a system that doesn’t seem likely to change anytime soon.
So what can be done? I am of course particularly interested in the tech sector (more specifically in startups working with artificial intelligence) as tech is the fastest growing sector in the United Kingdom. The AI revolution has the opportunity to drastically reshape the economy adding upwards of £230 billion by 2030. Though many jobs will undoubtedly be lost to AI, we should focus on the millions of jobs that will be created. This is where incentivising Black involvement comes in. Inclusive innovation has the opportunity to disrupt systemic disadvantage. Therefore, I think our attention when it comes to Blacks in the UK economy should focus on increasing participation in AI tech start-ups. Organisations such as Colourintech and UK Black Tech are working towards this goal.
What is missing to me is an actual Black tech startup incubator where participants are given one-to-one attention, training in entrepreneurship, access to networks of support, investors, and most importantly connections with mentors. These are things that all startups need, but are more difficult to access for Black entrepreneurs. I am suggesting we adopt something along the lines of the successful work that Oxford Insights’ founders did with the Open Data Institute in Mexico in creating Labora, but focusing our efforts on Black entrepreneurs rather than startups using open data. The Government should also make generous business grants available to Black entrepreneurs in this sector. Some grants targeting Black and other minority ethnic groups already exist, but I would like to see these focused on sustained growth rather than launching/seed stage given what we know about the rate at which tech startups fail. We should also incentivise and prepare young black people to successfully take up studies in tech via financial support, bolstered after-school programmes and opportunities for internships.
The burgeoning AI industry presents us with an amazing opportunity to dramatically alter the face of the future workforce. This future workforce could be a vibrant, diverse community that is representational and inclusive. Think about how that will affect the rest of society. The UK is a world leader in tech innovation — why not lead in diversity and inclusion as well? This is a real possibility, if action is taken now.