More than 90% of angel investors in the UK are male, and 93% of them are white, but a new scheme by VC firm Ada Ventures is determined to change that.
Ada Ventures launched in 2019 with a $34m fund, aiming to invest in overlooked founders. Under their new ‘Ada’s Angels’ scheme, five candidates with direct experience in underrepresented communities have been selected, and they’ll each receive £50,000 to make five £10,000 investments into businesses across the next year.
Several reports have highlighted the barriers to becoming an angel investor for people not connected to traditional VC networks, which tend to be overwhelmingly male.
“Angel investing has very high barriers to entry,” says Check Warner, founding partner of Ada.
“You need a huge amount of capital at your disposal to be able to make regular, comparatively risky investments into young companies. Due to the profile of most angel investors, this means that companies founded by founders from diverse backgrounds are being overlooked.”
A lack of diversity among investors has repercussions for everyone, the firm says, causing biases in who receives investment and therefore in the services, products and tech that gets to market.
One of the five candidates selected for the scheme is Arfah Farooq, who founded Muslamic makers, a community for Muslims working in the tech sector.
“Building a community of Muslims in technology has allowed me over the last few years to meet many founders,” says Farooq.
“Access to early-stage capital is a massive hindrance in them being able to take their startup to the next level. Being Muslim and sometimes from a low social economic background means that they don't have the privilege other founders do. They get overlooked and miss out.”
David Fisayo, director of Foundervine, a social enterprise that specialises in digital startups for diverse founders, is another of ‘Ada’s Angels.’
“To effectively level the playing field and diversify the founder landscape, it is very important to have a diverse pool of angel investors to fund them,” says Fisayo.
As well as Fisayo and Farooq, the three other investors selected are Anjel Noorbakhsh Ashman, founder of the Iranian Women’s Association, Nicole Crentsil, founder of Black Girl Fest and Ash Phillips, who founded Yena, a community for startups which provides accelerator like business benefits by subscription.
The Ada team believe that the initiative became even more critical once the coronavirus pandemic hit, because evidence is already showing that the economic effects of the virus will be uneven across society, with women and young workers particularly badly affected.
“We hope that Ada’s Angels will help to discover a new generation of investors, and continue to break down the barriers in the UK tech industry,” says Matt Penneycard, another of the firm’s founding partners. “Especially those that exclude people that do not fit an old and tired template of what an investor should be.”