‘All we’re asking is for a level playing field’: black entrepreneurs in the UK
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By the beginning of 2007, Jamal Tahlil had had enough.
Having arrived in the UK alone from Somalia while as a teenager, he spent several years working as a security guard in London and Leeds but saw little realistic prospect of promotion — because of his ethnicity.
“There was no progression for me because of my skin colour,” he says. His friend Edgar Chibaka, who had arrived from Malawi in his early twenties, felt the same way.
“You end up being frustrated — how long are you going to live with this frustration?” Chibaka says. Tahlil raised the issue of bias with his employer as he resigned but his mind had been made up for some time: the pair would strike out on their own.
The result, 16 years on, is First Response Group, a Leeds-headquartered company which provides the services needed to keep a building or large event running smoothly — from security guards and systems to cleaners, facilities managers and concierges.
First Response is now established across the UK, with clients including financial institutions Axa Insurance, Abrdn and Legal & General as well as the Elizabeth train line between west and east London.
The company directly employs 1,200 people with its ranks sometimes swelling to an additional 2,500 as it provides temporary staff for events such as concerts or sports fixtures.
First Response Group reported revenues of just under £36mn for the year to the end of July and expects this to rise to £60mn in its current financial year. Pre-tax profits were just over £2.5mn.
The company’s success has made them wealthy: Chibaka, 49, says they have chosen to reinvest as much as possible into the business — so the millionaire label is “on paper”, he says — but as Tahlil, now 42, wryly adds: “We’re OK now.”
It also makes them members of a tiny cohort: black entrepreneurs in the UK whose businesses have reached a large scale, of the kind required to win large contracts and institutional clients.
Although definitive statistics on ethnicity and business ownership are unavailable, the general consensus is that while there are plenty of small black-owned businesses, there are few well-known black entrepreneurs running larger businesses.
There have been some notable individual successes. On a national level, car insurance fintech Marshmallow — which advertises its cheaper as premiums as “insurance with a sweeter side” — founded by twin brothers Oliver and Alexander Kent-Braham and valued at $1.25bn in 2021, is the best known.
Former footballer Reece Wabara has made a name with his Manière De Voir fashion brand as has Sol Campbell, the ex-England star, in the property business. In 2021, First Response Group was awarded the top prize at the Black British Business Awards, noting its role as a large employer.
Those familiar with the SME world say levels of entrepreneurship are high among black people. But there is a lack of household names in a country where 4.2 per cent, or 2.4mn people, identified as black according to 2021 census data for England and Wales.
“It’s a big deal when you see [someone like] ‘the fintech company, Marshmallow doing so well,’ [but] the fact we still see it as a big wow shouldn’t be a story,” says Ken Okoroafor, who runs website, The Humble Penny providing personal financial advice.
Black entrepreneurs and organisations focused to supporting businesspeople from diverse backgrounds speak of multiple challenges including access to finance, a paucity of support networks and discrimination.
The picture is complex with many people saying that while anti-discrimination laws have stamped down hard on overt prejudice there is still a pervasive sense that the hurdles black businesspeople have to clear to win trust are higher. This is frustrating for fledgling businesses which are struggling to get off the ground.
Funding is often cited as the biggest issue, whether it is a sole trader applying for their first small bank loan, to established businesses seeking to scale up through venture capital or other institutional backing.
“Access to finance is obviously the main issue. Black entrepreneurs tend to stay within their personal circles, their own community,” says Shari Leigh, founder of the Black Business Network.
She founded the organisation in 2018 to address a lack of networking opportunities after a career working in corporate events for financial institutions. “I noticed there was a lack of people who looked like me at these events,” she says.
The BBN runs networking events and provides research. Alongside Lloyds Bank and research company Savanta, it produced a report last year — Black. British. In Business & Proud — which found that only 40 per cent of black business owners “trust banks to have the best interests” of the community in mind, less than the 43 per cent recorded for 2021.
Among the report’s recommendations is a call to improve black representation in financial services and to have ring-fenced financial support.
Black entrepreneurs are “not even trusting the banks enough to go to them for funding,” says Leigh. “And we’re talking about a community that doesn’t have a lot of generational wealth to begin with.”
Thousands of black people arrived in the UK from Commonwealth nations — mostly from Jamaica and Barbados — in the 1950s and 1960s. More recent black immigrants have primarily come from Africa, sometimes as refugees, for example from Somalia. Most arrived in Britain with little or no family money.
The pervasive lack of cash is familiar to both founders of First Response. The business began life in a rented office room above an internet café and a kebab shop — “a cold room,” Chibaka unhappily recalls — with him and Tahlil scouting for business on a shared laptop, using credit cards to access funds. The partners worked night shifts elsewhere as security guards to support their families.
They applied for bank loans but the stumbling block was their status as renters — Tahlil at the time lived in social housing — instead of homeowners with some financial security. “This is a big challenge people from black communities are facing,” adds Chibaka. “[Lenders are] looking for security, so brilliant ideas die out.”
They also draw a contrast between the lack of capital in their own community of recent immigrants and the funds available to entrepreneurs in more established groups, such as the south Asian community in Leeds which put down roots in the 1950s and 60s. “We didn’t have this luxury,” says Chibaka.
First Response obtained credit from one of the UK’s main high street lenders for SMEs, using invoice factoring — in which customer IOUs can be exchanged for money upfront — and then asset-based lending. They now work with Bank Leumi UK, part of an Israeli group, and say the terms are more generous.
Although they had good personal relations with some individuals at their previous bank they felt there was a lack of trust and the better conditions at Leumi prove it.
“The previous provider was very unsupportive to the point of asking us: ‘Why do you want to have a big business? Why are you growing the business so fast?’” says Chibaka, adding that First Response would be bigger today had it received the financial support they wanted earlier. “When we talk about the prejudice within financial services, it is real.”
Stephen Pegge, managing director of commercial finance at UK Finance, which represents the financial services industry, acknowledges a lack of trust in institutions has been an issue but suggests this was driven by perception rather than prejudice.
He argues that banks need to do more by building better relationships and by ensuring bank managers on the office floor understand their employers’ initiatives. “I’m encouraged but we need to keep that momentum up,” he said. “Banks and finance providers are increasingly competing to attract diverse entrepreneurs.”
Leigh at the BBN says that businesses which focus on providing products or services specifically aimed at the black community, in areas such as beauty products for example, are at an added disadvantage as banks do not necessarily understand that black-focused markets are bigger than they might seem.
Relevant financial education for entrepreneurs is another huge issue.
Having moved from to the UK from Nigeria aged 14, The Humble Penny’s Okoroafor worked as a chartered accountant before switching to his own business which he runs with his wife Mary.
Their mission is to help people to achieve financial independence, including scaling up smaller businesses. “Especially in the black community, money and entrepreneurship are not really taught,” he says.
This experience resonates with Kike Oniwinde-Agoro, founder and chief executive of BYP Network, a career development platform for black professionals. A former javelin thrower for Team GB, she started the business in 2016 in her bedroom but did not consider the possibility of even a modest bank loan.
Although this was in part because she did not, at the time, think she needed the money, she adds: “I did not know you could get funding for business — I thought you had to bootstrap.”
The company, which lists jobs, runs events and offers a mentoring programme, is now global with over 150,000 members and has earned her a place on a Forbes magazine list of 30 under 30 entrepreneurs and leaders. She has joined a business accelerator programme and won three grants as well as securing funds from angel investors.
“I grew up in a very diverse area with many diverse friends but when I entered the world of work I realised not many people looked like me,” Oniwinde-Agoro says.
Demi Ariyo founded Lendoe, a platform providing funding to business owners from under-represented groups, aiming to support businesses. He says there are cultural factors why some black entrepreneurs may be reluctant to seek funding.
“Credit in the black community is often seen as dirty, it’s often seen as bad,” he says, pointing out that first-generation immigrant households are particularly reluctant to become what they would regard as more financially vulnerable.
Ariyo had a spell working in financial services before launching Lendoe but became aware of an advice gap through more personal circumstances: during a successful fundraising effort to save his church building, he was approached for advice by entrepreneurs.
“There was this real opportunity to provide access to finance and giving them that advice that they needed,” he says.
Also, being cautious about debt means that entrepreneurs often have no credit history when they eventually do apply for loans, perversely putting them at a disadvantage.
This was the experience of Charmaine Hayden, an entrepreneur who has set up a modelling agency and venture capital firm, GOODsoil, which focuses on sustainable tech start-ups in Africa. Now dividing her time between the UK and Ghana, she recalls it being a struggle when she founded the face4music modelling agency two decades ago.
She tried to secure bank loans but was unsuccessful given her insubstantial credit score so worked in three jobs while also studying to launch the business, which promotes curvier models from ethnic backgrounds. The business, which she no longer owns, later received grants including Arts Council support.
“I am a bit of a rebel with a cause,” she says but adds there were multiple barriers. “It was gender, it was race, it was also class. Asking my mum for £20 was going to be a struggle, never mind £20k.”
Is the picture improving for black entrepreneurs? “There’s been a lot of work done in the past two years,” says Leigh, citing the effect of the George Floyd protests and BlackLivesMatter movement in 2020.
“We saw a significant number of people of colour in this country coming together to say they had been impacted [by racism],” she adds, saying it acted as a catalyst for a lot of companies to think about ways they could improve. “Three years on from that, we’re starting to look at what impact has been made. There is a feeling we’re further along [but] I don’t think it is something that is going to happen overnight.”
Some UK companies are now publishing ethnic pay gap data but unlike with the gender pay gap, there is no legal requirement; the CBI business lobby, Trades Union Congress and Equality and Human Rights Commission, an independent watchdog, have called for mandatory disclosure.
Some observers argue that ultimately change has to come on a systemic level and not just through specific initiatives. “I personally think there isn’t enough of a conversation about this being had,” says Okoroafor. “The topics we’re talking about are very, very sensitive.”
He has written about how his mother, who set up a childcare business around 14 years ago, felt she had to employ young white female staff in order to fulfil the expectations of customers about what a person working in childcare should look like.
“It breaks my heart to actually reveal that,” he adds. “There are certain unwritten barriers which mean we have to do things a bit different.”
A 2021 government-commissioned report into racial inequality in the UK was widely criticised after it concluded that although racism “is a real force in the UK,” most racial disparities were not directly linked to racism, arguing that “geography, family influence, socio-economic background, culture and religion” were more significant. The Commission on Race and Ethnic Disparities was accused of downplaying institutional racism with Frances O’Grady, general secretary of the Trades Union Congress, calling it “complacent”.
Okoroafor says “I don’t see any material shifts from a government perspective, from a policy perspective,” he says. “You see more black people in adverts [but] is there a genuine or a cultural shift on how we perceive black talent? Is the trust barrier being lowered?”
There is also sensitivity about how black-owned businesses present themselves. The BBN’s Leigh says some entrepreneurs have “fears about presenting as a black business. They felt that saying that they would only marginalise themselves” — in other words, being pigeonholed as businesses which are focused on the black community.
Okoroafor stresses that the importance of ensuring businesses thrive goes beyond questions of fairness and diversity. “From a UK GDP perspective this really matters,” he says, quoting a statistic from the Federation of Small Businesses which finds that ethnic minority founders contribute £25bn to the UK economy. “We are in a desperate place economically as a country. It’s the interests of all of us as a nation.”
Despite early struggles, Tahlil is positive about the country that fundamentally helped him make his fortune. “The vast majority of people in the UK are the best people’’.
Ultimately, black-owned businesses want to be judged on their own merits. As First Response’s Chibaka says: “We don’t just want to be seen as role models, we want to be seen as people who are capable.”
This article is part of FT Wealth, a section providing in-depth coverage of philanthropy, entrepreneurs, family offices, as well as alternative and impact investment
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