Ethical Equity pledges to close the inequality gap in Venture Capital

We caught up with Ethical Equity to learn more about how they’re striving to drive investment into startups who are creating positive impacts with their business venture.

“Ethical Equity is an online investment platform that champions and supports startups and scaleups that are looking to deliver social, environmental and cultural change,” explains founder Ali Kazmi. The investment platform has an E-Impact criteria to provide underserved entrepreneurs with a chance to pitch to investors that align their values with the mission of any given startup and scaleup on Ethical Equity’s database. 

You can watch the full interview here to find out more about how to get involved.

The idea for Ethical Equity arose from Ali’s work in UK Venture Capital schemes in the last decade. He couldn’t ignore the stark displays of inequality and biasness around him, appalled at how some demographics of founders weren’t, and still aren’t, receiving fair access to capital. Ali tells us, “Between 2009 and 2019, ethnic minority entrepreneurs only received 1.7% of capital. Within this 1.7%, black entrepreneurs received 0.24% and black female entrepreneurs within that 0.24% received only 0.02%.”

These dire statistics plainly illustrate that we aren’t doing enough as a community to create equal opportunities for underrepresented entrepreneurs in tech. “For me, that didn’t sit right,” says Ali, “Rather than waiting for somebody else to do something, I took it upon myself and set up Ethical Equity to challenge the status quo.”

Executive Director of Ethical Equity, Denis Lindsey, adds to this: “Before the pandemic, we already noticed a shift from organisations that were pursuing profit over people and the planet, to organisations that were valued based.” Ethical Equity wants to support this shift and encourage this trend to remain on an upward trajectory. The platform creates an infrastructure to “attract impact investors that would want to use their capital to affect positive change on societal change,” explains Denis.

So how does it work? Well, investees are able to sign up, register their profile, their pitch, and any information that is relevant when looking for funding. On the flip side, angel investors are then able to browse the platform and look at the opportunities available to invest in. 

All startups and scaleups must be ethical-Islamic compliant. Ali explains this means the product or output from the organisation must have these three hallmarks: “Firstly, it’s non-interest bearing, secondly, the types of contract the investee or the company is engaged in must be two-sided, and finally, the trade, the startup or whatever the product is, must be one of that is in the interest of the public.” This means anything that threatens the livelihood of people or the planet would not be compliant. 

Ironically, Ethical Equity’s biggest challenge has been getting people to see the inequality in access to funding. Ali tells us, “I think it’s so embedded into the system, that people just think that we’re making this up and are simply not aware of the reality. When I tell an impact investor the statistic about ethnic minorities only accounting for 1.7% of investments, they are really taken aback by the information.

“Everybody seems to think that it’s a level playing field. Being able to convince people that it’s not, is quite challenging as you’re coming against the norm.

“It’s not always the case, especially with some of the impact investors that we’re working with. They come on board immediately, because they immediately know the problem. They’ve seen it, and they’ve been in that industry. But some people are just blinded by the fact that they think the UK is the leading centre for startups. So everything must be full of glory, but it’s far from it.”

As Ethical Equity begins on its own journey, Denis tells us, “For me, the most exciting thing without much effort at the moment at all, is the amount of great businesses where we’re finding already,” demonstrating how pertinent this platform is. 

Ali says the most rewarding aspect of running Ethical Equity is, “reaching out to those underserved entrepreneurs that essentially have lost all hope of being able to raise capital or access angel investors.” He continues, “When we speak to them and tell them what we’re about what we’re trying to do, they immediately get it. And you see the smile on their face, and you can see that they light up with hope. That’s the best feeling that we could give to any founder.”

Denis encourages investees and investors to reach out to Ethical Equity. He says, “Impact investors that have the same values that we have, and therefore the same beliefs, need to come and join us. As do those untapped, underserved minoritised founders that find it very difficult to get access to capital. Collectively, we can make that impact that we all believe in.”