Black entrepreneurs account for only 1% of Portuguese start-ups

“The lack of diversity and equity is costing the Portuguese ecosystem profits, talent and innovation,” Fernando Cabral never tires of repeating. Living in London, the Guinean is a co-founder with his brother Rudolphe of Djassi Africa, but it is in Portugal – where they grew up and forged a significant part of their professional careers – that they chose to begin mobilising and empowering entrepreneurs from the African diaspora as part of the company's strategy: a venture builder focused on transforming the African continent by injecting resources to develop start-ups and prepare them for future investments. But when it came down to it, they faced a glaring lack of “black founders”, African and Afro-descendant entrepreneurs. That is why they decided to promote the Afropreneurs Report, an exploratory study that sought to map out and characterise these entrepreneurs and their businesses within the country, while also shedding light on the restrictions they face in accessing the networks and capital that are necessary for growth.

“Our focus is not on making reports. We are on the front line. But how can we work with ecosystems without references? How can we have conversations without numbers that guide and contextualise us? Last year we were venture partners with Google in the UK – we prepared 13 start-ups for the Black Founders Fund [a fund for start-ups led by Afro-entrepreneurs], of which three were successful [secured investment] – and they asked us where the Portuguese start-ups were. We didn't have any, so we started to think about it. If it’s about innovation, diversity is a development metric: more diverse ecosystems are more mature,” says Fernando during our Zoom meeting. Rudolphe was also present in a third “window”. This is the second time we have met. The first time was at UCCLA (Portuguese Speaking Capital Cities Union) in March, where they presented the findings of the research they had carried out between July and December 2022, in partnership with professor and researcher Caterina Foá and a team from the Sociology Studies and Research Centre (CIES) at Iscte – Instituto Universitário de Lisboa.

How many are there? Who are they? What are they doing? What difficulties do they face? How can we support them? After the first question, they admit they couldn't stop. However, the answers were neither immediate nor clear. They started by “researching in the old-fashioned way”, in an effort to understand how many entrepreneurs there are in the Portuguese ecosystem and how many of them are African or Afro-descendant. They arrived at a total of 1,059 entrepreneurs, of which only 0.8% are black. “The European average is 3% of black founders included in the [innovation] ecosystem. In the UK, which is the most developed ecosystem in Europe, the figure is 6%. So, right off the bat, we knew that Portugal should be somewhere between 1% and 3%, because it would never be above the European average. We just didn’t know the exact value, so the main message is: we know the gap exists, we’re going to acknowledge the gap, and we're going to work together to change the paradigm,” says Fernando.

According to Startup Portugal, there are more registered startups in the country: 2,151 to be exact, but there is no exact characterisation of the agents involved. “There are no official data in Portugal on the level of diversity within the ecosystem from either an ethnic or a gender perspective,” says Rudolphe, evoking Fernando’s comments in March, when he said: “In the absence of statistics, ours are valid.” The results are based on a sample of 200 black entrepreneurs who answered an online questionnaire (which was open between July and August 2022) disseminated via different channels and media, by such names as the musician Dino D'Santiago, who is responsible for the Lisboa Criola project, and Vanessa Sanches, the editorial coordinator of the digital magazine Bantumen.

“[The Afropreneurs Report] is the first of its kind in the country and in this specific sector. That's why it was designed and carried out by a specialised team, with all the necessary scientific rigour, methodological care and dedication,” says Caterina Foá, who emphasises the importance of the work she co-authored, especially “considering the absence of previous studies” and the “high adherence”. In addition to the online questionnaire, 40 individual and group interviews were carried out for a qualitative analysis “that enriches the granularity of the statistical results and directly represents the voices and experiences” of the various players, from entrepreneurs to investors. “It was important to have an objective baseline. We start working from now,” adds Fernando, who immediately calls for more research, including by government agencies and by organisations that support entrepreneurship. In fact, this is the first of the ten recommendations contained in the report. But we'll get to that later.

There is talent and experience to spare

Of the 200 “black founders” profiled, the majority are between the ages of 25 and 34 (48%), have a degree (76%), speak two or more languages (67%), are or are descended from PALOP immigrants (81%), live in Lisbon (84%) and are women (54%). According to the report, which considers and cites other international studies, the predominance of women contrasts with national and European statistics on female entrepreneurship, but is in line with the trend observed on the continent of Africa, where it is estimated that they represent 58% of the total self-employed population. “At this point, it is important to highlight the importance of having people from diverse backgrounds analysing the data. As we operate in Africa and are familiar with the phenomenon, which is historical, [we know] it is natural,” says Fernando. Rudolphe adds:

“There is really no shortage of women trying to innovate. There are other problems that prevent them from being visible [only 11% have access to incubators and acceleration programmes].”

That's why the Afropreneurs Report includes a section dedicated to highlighting their experience. Fun fact: they are more qualified than men, but are less confident in their ability to attract investment.

As for their motivations, both genders seem to agree on the top three reasons that led them to entrepreneurship, which are financial independence (98%), solving a problem in society or a specific community (89%) and pursuing an interest, passion or challenge (72%). However, whether they have only an idea (35%), a startup (40%) or a digital business (25%), only 39% are dedicated to the task full-time. The majority focus on media and creative industries, information technology, consulting and finance, and the companies were launched after the start of the pandemic, between 2020 and 2022. In startups, “we have, for example, some fintech [operating in the financial sector with innovative technological solutions], such as Vânia Fortes’ Jupiter app, and many e-commerce platforms, such as Liliana Rosário's Circular Closets,” says Fernando, adding the caveat:

“When we designed the questionnaire, the idea was to attract only startups, but from the responses we received we soon realised that we would have a low number – many of the businesses haven’t got there yet – which is why we also included digital businesses and business ideas, so that in future reports we can see the conversion of these businesses and ideas into true startups.”

The big question that arises is how can one be successful with little or no visibility? In addition to being underrepresented, Afro-entrepreneurs have faced several challenges, particularly in the access to investment. According to the report, only 30% of black entrepreneurs received funding, with 54% expecting it to be difficult to achieve the same in the next nine to 12 months. The lack of literacy in the field – which is “greater than would be expected in a country in which so much has been said about innovation and which is home to the Web Summit [at least until 2028]” – is just one of the factors that makes it difficult to access relevant programmes and support networks. The gap between entrepreneurs and investors is enormous – and is the greatest of all problems. “Incubation and acceleration programmes [that facilitate funding] are designed in such a way as to ensure ‘black founders’ do not recognise their value and are not chosen [to benefit from them], because none of the teams that manage them – the panels, the investors, the mentors – are diverse. That is why underrepresented group businesses are seen as high-risk.” According to the 2021 Atomic State of European Tech, most of the entrepreneurs who secured funding are white. Only $1.8 billion was allocated to ethnic minorities, compared to the $103.9 billion raised by exclusively white teams. In the UK, for example, according to data from a report published by Extend Ventures in 2020, only 0.24% of venture capital went to black entrepreneurs between 2009 and 2019. This means that in a decade, only 38 companies founded by black entrepreneurs were funded.

The situation is not encouraging, but there is room to reverse the trend in the medium term. This is where Djassi Africa's recommendations to develop strategies, programmes and incentives to support Afro-entrepreneurs come in. The goal is to ensure fair access to resources, networks and capital, contributing to a more inclusive ecosystem in which everyone can thrive. “Removing all forms of exclusion, whether active or unconscious, is not just the right thing to do, it's the only thing to do,” says “The Way Forward”, the last section of the Afropreneurs Report, which proposes 10 solutions to the main barriers impacting black entrepreneurship in Portugal. “All are important and complementary, but it is important to reinforce the importance of having more knowledge, therefore deepening the theme of representativeness in Portugal, and then I would say that it is urgent to create programmes dedicated to Afro-entrepreneurs so that we don't have just one startup in [existing programmes], but several dozen,” concludes Rudolphe.