‘The big challenge is how to break prejudices and assumptions’

London-based Impact X describes itself as “a double-bottom-line venture-capital firm founded to support under-represented entrepreneurs across Europe.” “That means we put our money where our mouth is,” says Impact X CEO and founder Eric Collins. “We invest in hidden gems — companies started by women and people of colour that are going to become the next Amazon or Netflix.”

What does your role involve?
First, we’re looking for top quartile venture returns for Impact X’s limited partners. But we’re a double-bottom-line venture-capital firm, so I’m not just looking for the next large-scale financial-return vehicles: I’m also looking for job creation — that’s job creation at founder level, board level and C-suite level for women and people of colour. We also invest in direct-to-series television productions, as we find that investing in projects from the right production companies can deliver venture-similar ROI — and it also deals with the under-representation problem behind and in front of the camera.

So Impact X is both an agent for delivering return on investment and an agent for delivering social change. My job is to make sure we choose companies and projects wisely to achieve that, because if you don’t choose wisely, you’ll never get people to invest with you again.

Lenny Henry

What is the main focus for you?
Impact X started because a guy named Lenny Henry decided something had to be done to solve the problem of Black children living in poverty in the UK. Black Britain is currently dominated by a major statistic — which is that one in every two Black children live below the poverty line, as opposed to one in five white children. And when you look at the impact of Covid, the cost-of-living crisis and inflation, that number is actually much bigger.

So Lenny went to tech entrepreneur and educational philanthropist Tom Ilube, who was then a non-exec director of the BBC and is now chair of the Rugby Football Union and on the board of WPP, and between them they put together a working group of entertainers, athletes and business people to try to answer the question: what can we do? And one of the answers was create a large pool of capital that could be used to fund our missions around positive change for Black Britain. This was back in 2018 — and Impact X was the ultimate result.

What are the biggest challenges?
Alleviating poverty, because poverty drives the problem of educational disparity, as well as the problems of health and wealth disparity. These issues can only be solved if we address the question of where money is created and how it’s deployed. We know that people tend to hire people who look like them. So if we could build an organisation with the scale of, say, a Disney or a Microsoft that was started by a Black woman, that would have a measurable impact on inclusion and diversity.

Another major challenge is asset allocation, particularly among the big charities and foundations. The received wisdom is that the people who need money are Black and brown people and women, and the people who make money are white men people. And white men tend to invest money with other white men running venture capital funds and private-equity firms. And then the white men might use a bit of the money they make to set up a mentorship scheme or an apprenticeship programme for women and people of colour — and that’s considered to be appropriate.

So the big challenge is how to break those assumptions and prejudices about the kind of people who make money and the kind of people who need money. Impact X has been able to show through its track record over the last four years that the returns we deliver by investing in under-represented entrepreneurs make sense in commercial as well as ethical terms.

Can you give an example of how you set about trying to influence positive change?
When Impact X is hiring third parties, whether banks, consultants, lawyers or finance firms, we say: “If you don’t have a Black woman on your team, don’t work with us.” We make that demand — and we can, because it’s our money, which means we have the power to insist that women and people of colour are at the table.

Imagine the positive impact it would have on diversity and inclusion if a company like Amazon, which hires hundreds of organisations on a weekly basis, adopted that approach? This goes beyond supplier diversity set-asides, which are great. We demand that every outsourced task, from lobbying to art departments, has fully enfranchised under-represented people delivering the organisation or project’s most critical metrics.

We’re also very deliberate about the deployment of our resources. In the UK, venture-capital firms deployed about £10bn [US$12.8bn] over the course of last year. The portion of that £10bn that went to companies controlled by women and people of colour was tiny. So Capital X is very clear about what it will support and what it won’t, based on the values that an organisation displays, such as who they hire, who they promote and their approach to social justice and equality. That’s how we make our money talk.

Over the years, I’ve tried to change the status quo by participating in everything, from suing to marching to collaborating to appeasing, but still, even during the biggest economic boom period in recent UK history, one in two Black children is still living in poverty. It’s clear that the only way to effect real change is to change the system from the top down using commercial strategies.

What are the most common issues that need to be addressed?
The fallacy that there aren’t enough competent women or people of colour to invest in. We have literally thousands of potential investment vehicles in our pipeline, so the problem’s not with supply but with venture capital firms’ love of closed networks and their lack of creativity. Venture capital at its best is about disrupting the orthodoxy and harnessing innovative thinking to generate returns, so they really should be able to put their big brains to work on solving their pipeline failure. To say it’s the fault of the victims and blame them for not being good enough is an example of institutionalised racism and sexism.

I went to Harvard Law School. There were 550 people in my class and over 60 of us were Black Americans. But those Black Americans were driven. In fact, one went on to become president of the United States. But when I look at the financial and media worlds in the UK and the US and at the people who have ascended to positions of power, most are no smarter or harder working than the folks I know from university and law school. Their X factor is to do with people employing people who share their networks, think similarly and who often look like them.

Ursula Burns, who was the first Black women to run a Fortune 500 company in the US, talks about this in her memoir Where You Are Is Not Who You Are. She makes the point that the only way a Black woman can be accepted as equal to a white man — i.e. worthy to be a board member or run a company or even a function — is if she’s exceeded that man to a ridiculous level. At the very least, she needs to have gone to the moon, found a cure for cancer, married and raised seven children and adopted 20 homeless dogs. Only then will she be considered the equal of a white man who went to university and has sat in a brand-name organisation for his entire career. It’s a prejudice I have very little patience for.

Who has impressed you in terms of how they are working to bring about change and what elements do you find most inspiring?
Impact X’s founding members impress me. These are people who have stepped up financially with their own resources — people like Lenny Henry, Ric Lewis, who runs the largest private-owned Black business in the UK, Ursula Burns and Vivian Hunt, who headed up McKinsey. They didn’t just look at the problem, say: “How terrible…” and suggest a fund-raising gala dinner to fund a mentor scheme. They were prepared to put their own money into an organisation designed to test the hypothesis that investing in women and people of colour is a sound commercial proposition. It’s turning out to be a gold mine, but when we started out down this road, that was far from certain.

I’m less impressed by what companies are doing in this space. Some are doing good things, for sure — some, for example, no longer vote for boards of directors that don’t include women and people of colour. It’s a step. But I don’t think there’s any company out there that’s doing anything extraordinary or taking a leadership role. I don’t see anybody taking a systematic approach that’s going to overturn the status quo and make a difference within a short generation by betting their futures on this type of disruption.

What advice would you give to someone working in a similar role to yourself?
My first tip would be that people reveal themselves very, very early. Those who want to put their shoulder to the wheel, put their shoulder to the wheel quickly. Those who don’t will meet with you, take you to lunch, invite you to parties, but they will not ultimately be allies.

My second tip is that allies are a fantastic thing and they exist along a continuum. At the one end, there are the fast movers who want to help you achieve your world view; at the other, there are the very, very slow ones who require all sorts of evidence and changes to strategies and even outcomes before they get half-heartedly involved. Beware that end of the continuum.

So learning how to allocate your time — especially since time is not fungible — is very important. Spend more of your time with close allies who see the world similarly to you. And let your track record speak to those with whom you have less of an affinity.

C21’s Big Picture is an ongoing initiative to support positive change in and through the content business across four key areas of focus: inclusivity & diversity, sustainability & environment, business practice & operations and content & storytelling.