The Brixton Fund Looking for the Next Black Unicorns

Cyril Lutterodt pitched to one hundred VCs with zero results. Now, with Black Seed, he’s helping to raise £10 million to fund thirty Black-led startups.

Turn the corner from the tiny restaurants serving goat Ayamase stew and temaki sushi in Brixton’s Market Row and it’s easy to miss the Nest video doorbell on an otherwise nondescript door. This is the temporary HQ of Black Seed, a new fund for Black founders whose permanent digs are under construction just the other side of Atlantic Road.

“Sometimes I can feel the statistics,” says co-founder and chairman Karl Lokko. “I’m getting the warmest intros, like a mother’s embrace intro, and the offering is remarkable, it’s robust but it has still been hard. It’s been an uphill battle. We are pitching constantly.” The stats Lokko and president and MD Cyril Lutterodt are up against are frankly embarrassing. Zepz and Marshmallow might be the first two Black-founded unicorns in the UK but, according to a report by Extend Ventures, 0.24 per cent of venture capital in this country went to Black founders between 2009 and 2019. That’s funding for as low as around 38 companies in total.

Black Seed’s ambition? “We want to create the next ten Black unicorns, the next 100 Black VCs,” says Lutterodt. The first order of business is to raise £10m to seed 30 Black-led startups across Europe over the next three years, with cohorts of ten every year. Each startup has access to a custom programme from operating partner Founders Factory, including finance, marketing, legal, app development and AI support, plus six months of office space in Brixton, which Lutterodt says will be “the next black Silicon Valley”. “Very soon you might see skyscrapers,” he says. It’s not just LocalGlobe partner Saul Klein backing the fund, it’s also working with investors including Impact X Capital’s Yvonne Bajela, Turning Basin Labs’ Stephen Bediako and 10x10’s Andy Davis.

The first three founding teams are already locked in: a last-mile delivery startup, a skincare business and a payments-hardware offering. The plan is to finalise the first cohort by the end of 2021 with a series of online and offline events including a “Lyan’s Den” pitch day, in partnership with Google, offering £10K for one per cent equity. “A big part of why we’re taking the equity is that this is not charity,” says Lokko. “It’s part of the stigma of having a grassroots approach, and the fact it’s Black, but these are viable businesses and credible founders.”

The energy of the two men is – there’s no other word for it – contagious, as they joke, talk over each other and riff on each other’s soundbites and concepts like Lokko’s “hidden alumni” of underutilised talent from marginalised backgrounds or Lutterodt’s “garage fallacy”, the very American, very false notion that just about anyone can build a business at home with money from wealthy friends and family. The talk is clear-eyed but dynamic, a winning combination going into 2022. They were soon debating how the budding Brixton startup scene will be labelled: should it be Brixity or Brixtopia?

There’s a real sense that “you have to laugh", though. “Black founders are over-mentored and underfunded,” says Lutterodt. He went through ten accelerators with his (fairly prescient) healthtech startup ZOI and pitched to more than 100 VCs with zero results. He then turned to Lokko, who had been consulting for Big Four firms, Prince Harry and the government’s policy advisory teams, for help. ZOI is “on ice” for now after the two founders essentially had a race, during the first UK lockdown, to see who could get the first bite for the health project or a Black founders fund. Lokko won.

As for potentially awkward discussions with stakeholders around opportunity hoarding or damaging conventions such as cultural fit, “George Floyd helped us to take the gloves off,” says Lokko. “In the UK landscape, we have always happily discussed class but we had to shy away from racial elements for some years. Now we’re having those conversations.” A workshop this October, in collaboration with DeepMind, covered AI fairness and bias in predictive policing.

The two founders namecheck everyone from Jay-Z to Richard Branson, with Sherrard Harrington’s Miami-based EONXI venture fund, in particular, providing a blueprint for bringing together tech, culture, sport and venture capital. Lutterodt points out that one of Black Seed’s first events featured a founder, an angel investor and the rapper Krept: “Everyone has someone they can relate to, right?” The pair also plan to enter the Paris region, “the next bustling Black tech scene” in the next year and a half. The supremely well-connected Lokko says they already have “tentacles” there.

“The most exciting thing for the next six months is actually deploying capital. That is breaking news,” he says. “Now the tectonic plates are moving and causing minute shifts, so we can say that it’s been hard but it’s working. It’s hard but we’re raising.”

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This article was originally published by WIRED UK