My plan to give Black and under-privileged entrepreneurs what they need to succeed - cash
Samuel Kasumu (Photography by Lewis Patrick)
Twenty per cent of small businesses fail in their first year, whilst around 60 per cent fail within the first three years.
According to the Office for National Statistics, London recorded the highest business death rate, of 12.1 per cent of all existing businesses in 2020. For nearly half that close, the number one reason is running out of cash or failing to raise new capital.
This means that no matter how good your leadership team, or how strong your ability to adapt to the business environment, cash remains king. You could have the most inspiring, innovative business with the potential to change the world, but without the capital to keep going and growing you are on a hiding to nothing.
There are businesses that perhaps are not the most innovative who are able to withstand the tide and manage change simply because they can afford to – for example, a large business that has streamlined to focus on core products or has brought in a new chief executive that goes on to execute a change management strategy. Why are they afforded the time to adapt? Because they have the capital to give them the room to change.
Why is this important? The truth is when it comes to access to capital, we are not operating on the same playing field. If you do not have collateral to borrow against, such as your own home, a bank is less likely to take a risk and give you the business finance you need to grow or adapt. Evidence shows that if you are not from a privileged background you are unable to rely on friends or family for your first bit of start-up capital, and venture capital firms are less likely to take a risk on your idea. Access to finance is a major barrier for Black entrepreneurs, and the reason why 39 per cent stop working on their business idea, according to the British Business Bank.
This is an area that needs change – and I speak from experience. I have been involved in starting and growing a number of organisations. My first businesses as a young entrepreneur failed. They were experiences that stood me in good stead, but at the time failure was crushing. I felt suicidal, not wanting to deal with the shame of failure or the ambiguity of what to do next. During those dark times, I took solace from the words of Winston Churchill: “Success is not final; failure is not fatal: it is the courage to continue that counts.”
When you look at business failure rates, it is clear I am not alone. This is rarely spoken about because we as a country do not celebrate or embrace failure. Instead, we try to shame or expose. I am seeking to be the Conservative candidate for mayor of London because I understand the experiences of regular Londoners who are trying to get on in life. But I recognise as the outsider in this race I must have an inspiring plan that will truly make a difference in the lives of Londoners.
This is why I am announcing that as mayor of London I will establish a £100m investment fund, focused on investing in businesses led by under-represented founders. This includes people from working-class backgrounds, non-graduates, women and those from minority ethnic backgrounds.
The mayor will be the cornerstone investor, working alongside the British Business Bank and other financial institutions to establish a fund that will create jobs across the capital. The fund will focus primarily on digital technology, urban health, clean air and the future of food.
Many businesses are still disrupted due to Covid-19. These are tough times, but as we look to grow our economy it is important we back entrepreneurs with the potential to create jobs and be truly disruptive. This includes those who have never been given the financial support to do so.
Samuel Kasumu, candidate to be Conservative mayor of London
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