BKR Capital, the first institutionally backed Black-led venture fund in Canada, has celebrated its first anniversary by closing a fundraising round that blew past its targets.
The Black Innovation Fund surpassed its $10-million goal by raising $18.5-million by the end of July from investors that included the Business Development Bank of Canada, Caisse de dépot et placement du Québec and Vancity.
BKR invests in preseed and seed-stage technology companies led by Black entrepreneurs. The fund has already deployed funds to five companies, including fintech firm mIQ, sustainable-fashion online retailer Goodee, and Fynne, a platform for connecting hairstylists and customers.
The Globe and Mail spoke with Lise Birikundavyi, the managing partner of BKR Capital, about what she’s learned over the fund’s first year, why investors should direct more funds to Black entrepreneurs and how they are weathering a broader downturn in the tech sector.
Why did you launch BKR Capital last summer?
Both [co-founder] Isaac Olowolafe and I have been quite active in the investment space and in seeking ways to change a widespread negative narrative that is not a true reflection of the Black community.
As investors, we know that there are a lot of innovations that do not see the light of day or survive because of the funding gap Black founders are experiencing, which creates a strong arbitrage opportunity for people in our space focused on value.
We founded BKR Capital with the goal of, one, investing in the next Canadian unicorn coming from the Black community and, two, supporting the creation of additional role models for younger generations as they see more people who look like them get funded and create value. We are a small fund but we hope that our work will help drive more investment from the VC community in diverse founders as it is understood that there’s a real missed opportunity there.
How was the first year?
The year has been quite active. The highlights are the number of entrepreneurs we were able to connect with that are doing amazing work all across the country. For the vast majority of them, there is a strong desire to contribute to a more inclusive ecosystem.
On the challenging side, we do find it difficult to not support some of the talented entrepreneurs we see that are doing great work but are not the best fit for our thesis. Given that we aim to invest in only 18 entrepreneurs, which is already quite ambitious for a fund our size, we have to be extremely selective and strategic. We definitely see a need for more equity capital going toward Black founders.
What are some steps other firms could take to increase the capital going to Black entrepreneurs?
Simple measures such as checking one’s biases about the competency of founders from diverse backgrounds, and having more diverse teams and voices at the decision-making table, would go a long way in ensuring that VC firms attract a more diversified deal flow and capitalize on the opportunity that brings an inclusive portfolio.
Why is it important to invest in Black entrepreneurs?
It is important that everyone is part of a society that is able to contribute to it in the best way they can. When an innovative solution can’t be developed, mainly because of the racial background of the founder, we all lose.
It has been a difficult year for the tech sector so far. How do you keep up momentum?
In 2022 we saw a slowdown for everyone on the fundraising side in the tech space but also a higher focus on fundamentals of businesses, which can be seen as a positive thing. Generally, entrepreneurs from the Black community are able to stretch dollars further because this is what they have been used to doing, therefore we stay cautiously optimistic for our target demographic. It will be a challenging time for everyone, but we are still seeing growth and progress.
This interview has been edited and condensed.
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