Startups in Africa, supported by the Google for Startups Black Founders Fund, have secured $266 million in venture capital over the past three years.
This was revealed in a report by Google for Startups and Notion Capital, which measured the impacts of the Google initiative in Africa and Europe.
The programme, which raised an additional $91 million, has assisted companies in Europe and Black entrepreneurs who have long faced obstacles in obtaining resources and finance. Together with the $100,000 seed money, these firms have raised $379 million.
Impact made by Google’s Black Founders Fund
The Black Founders Fund was founded in 2021 and has since helped 220 businesses in Europe and Africa, of which 135 are in Europe and 85 are in Africa.
According to the report, The Black Founders Fund significantly impacts employment development. The fund-supported startups have had significant job growth, employing over 6,000 people in total. Compared to 902 jobs in 2021, this is an almost seven-fold growth. In particular, the fund-backed African businesses presently employ 4,059 people, more than four times the 1,050 workers they had in 2021.
The survey also showed that during three years, the average growth rate of companies funded by the Black Founders Fund was 61% faster than that of their counterparts at similar growth phases.
Discrepancies: Black-led startups receive less funding
However, it drew attention to a substantial funding shortfall for Black founders on both continents. Compared to their white counterparts, black-driven companies in Europe and Africa have a significantly lower chance of getting funded, which has led to an investment gap of $4.2 billion in Europe and roughly $10 billion in Africa. The amount of money invested in Black-led tech companies in these regions since 2000 has been a meagre $2.5 billion, or 0.51% of all startup investments.
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The report suggested that to overcome these discrepancies, legislators and startup stakeholders work together to support laws encouraging diversity in the IT industry and removing structural obstacles that Black founders must overcome.
To promote a more inclusive investment climate, it also urged educational initiatives targeted at investors to increase awareness of the prejudices and difficulties faced by minority entrepreneurs. It was also stressed that community-building projects should be strengthened to establish a network that allows Black entrepreneurs to work together, exchange experiences, and collaborate.
Selected firms can still receive equity-free cash prizes of $100,000 from the Google Black Founders Fund and up to $200,000 in Google Cloud credits. To help their growth, recipients also receive access to Google Cloud services, continuous mentorship, and product support.
Twenty-three Nigerian firms were chosen in 2022 to be part of the 60 African startups chosen for the program’s second cohort. Notable names from the continent, such as Eden Life, Estate Intel, Healthtracka, Haul247, and Flexfinance, demonstrate the fund’s impact and reach.