African startups backed by Google for Startups’ Black Founders Fund are making headway in funding, raising a total of $266 million from venture capitalists (VCs) over the past three years. This positive trend is revealed in a new report by Google for Startups and VC firm Notion Capital, which analyzes the impact of this initiative across Africa and Europe.
The Black Founders Fund will provide a major boost to startups, offering a $100,000 cash award with no equity required. Additionally, each company will receive up to $200,000 in Google Cloud credits. This funding is combined with ongoing mentorship from Google experts and product support to help them navigate the challenges of running a startup.
The Google for Startups Black Founders Fund was launched in 2021 to support Black entrepreneurs and address long-standing disparities they face in access to capital and resources. Since then, Google says the fund has supported 220 companies across Europe and Africa, including 135 in Africa and 85 in Europe.
In 2022, the program’s reach expanded to Africa. Of the 60 African startups selected for the second batch, 23 were from Nigeria, which has in recent years become the continent’s largest technology market. These included promising startups such as Eden Life, Estate Intel, Healthtracka, Haul247 and Flexfinance.
But the report also highlights persistent disparities in funding for Black founders.
Successful fundraising and job creation
The report details that European startups backed by the Black Founders Fund secured $91 million from VCs, bringing the total amount raised by African and European startups to $379 million, taking into account an initial investment of $100,000 from Google.
Beyond funding, the Black Founders Fund has clearly accelerated job creation: companies participating in the program currently employ over 6,000 people, a staggering increase from just 902 in 2021. Notably, African Black Founders Fund companies now employ over 4,059 people, representing more than a four-fold increase since the fund’s launch.
Great performance, but an uneven playing field
The report highlights that Black Founders Fund companies exceed expectations, growing at an average rate 61% faster than peers at a similar stage.
This achievement comes against the backdrop of a significant funding gap for black founders: “Only $2.5 billion has been invested in black-led technology companies across Europe and Africa since 2000,” the report states. This seemingly large figure represents just 0.51% of the total capital invested in all startups in the region.
Breaking this down further, the report found that in Europe, just 0.43% of all investment ($2.09 billion out of $482.5 billion) went to black-led startups, while in Africa the figure was 3.11% ($413 million out of $133 billion).
Closing the gap: policy and education
The report highlights the need for collaboration among stakeholders in the startup ecosystem, and recommends working with policymakers to advance policies that encourage diversity in the tech sector and remove institutional barriers faced by Black founders seeking funding.
Educating investors about unconscious bias and the challenges faced by underrepresented founders, as highlighted in the report, is another important step to foster a more inclusive investment environment in which Black founders have a more equitable opportunity to access capital.
Building a supportive community
The report highlights the importance of strengthening community-building efforts: creating a supportive ecosystem where Black founders can connect, collaborate and share experiences is crucial to their success.
While Google for Startups’ Black Founders Fund is clearly making an impact, the report acknowledges that there remains a continuing lack of funding for black founders in Africa and Europe.
It is suggested that by implementing the recommendations outlined in the report, stakeholders can work towards building a more equitable tech ecosystem that unlocks the full potential of Black-led startups.
