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Lack of black leadership in Brazilian startups reduces opportunities

. Aug 27, 2020
startups fintechs black leadership Image: André Chiavassa/TBR

When Sergio All, a black Brazilian entrepreneur in the advertising business, tried to take out a loan to upgrade his firm’s equipment many years ago, he was turned down by his bank, despite having been a client for years. The bank failed to provide an adequate reason as to why he was rejected. Indeed, the ‘no’ received by Mr. All is a recurring phenomenon across Brazil. According to a survey published in 2019, developed by Pretahub in partnership with JPMorgan and Plano CDE, one-third of black entrepreneurs in Brazil reported being turned down for loans for no reason. 

However, that ‘no’ was the spark that eventually led to the creation of Conta Black, a Brazilian fintech focused on addressing financial exclusion for the segments of society historically denied access to the banking system.

</p> <p>Founded in 2017, Conta Black now has around 10,000 clients, targeting individuals from Brazil&#8217;s C, D, and E socio-economic classes, corresponding to lower middle-class and below. In order to open the digital account, clients are not submitted to a credit score analysis, which other banks — both traditional institutions and fintechs — generally require.&nbsp;</p> <p>The <a href="https://www.bcb.gov.br/Nor/relcidfin/docs/art4_comparacao_internacional.pdf">Global Findex Research</a>, conducted by the World Bank in 2017, estimated that around 30 percent of Brazilian adults still do not have bank accounts. One of the premises of Conta Black is precisely to be as accessible as possible, seeking to integrate the share of Brazilians that are <a href="https://brazilian.report/podcast/2018/05/16/racism-brazil-podcast/">excluded</a> from traditional banking services, as co-founder Fernanda Ribeiro explains to <strong>The</strong> <strong>Brazilian Report.</strong></p> <p>&#8220;The first version of Conta Black, back in 2017, was not an app, it was home banking, focused on the population that does not own smartphones and couldn&#8217;t download mobile applications to use the service,&#8221; she recalls. Today, Conta Black does operate through a smartphone app, but the company has a constant concern to keep the software as lightweight as possible.&nbsp;</p> <h2>The push for black leadership&nbsp;</h2> <p>For Ms. Ribeiro, who is also the president of NGO AfroBusiness Brazil, the presence of black professionals — as well as women and people with disabilities — in leadership and decision-making roles in fintechs and startups has a direct impact on making the segment more diverse, affecting who these services will reach, and how.</p> <p>But the financial sector itself still stands in the way of diversity, as black entrepreneurs and business owners continue to have difficulty accessing credit.</p> <p>This was one of the motivations behind founding AfroBusiness Brazil, which Ms. Ribeiro defines as a &#8220;network of entrepreneurs, micro-entrepreneurs and self-employed profissionals.&#8221; Today, the NGO connects 8,000 business owners around the country.&nbsp;</p> <p>The aim is to create networking and connections seeking to &#8220;economically emancipate the black population,&#8221; she says. In the discussions, black entrepreneurs reported a similar situation as Sergio All had faced years before.&nbsp;</p> <p>One of AfroBusiness Brazil&#8217;s fronts of action is to connect black entrepreneurs to each other — to foster the circulation of so-called &#8216;black money&#8217; — but also to connect these entrepreneurs to larger companies. In this process, the people sitting on the other side of the table were generally white.&nbsp;</p> <p>&#8220;When we spoke to the people responsible for purchases, when we looked at the leadership, it was generally composed of white people. The people on the decision board were generally white,&#8221; says Ms. Ribeiro. &#8220;And when we looked into the overall employees, <a href="https://brazilian.report/society/2020/05/10/brazilian-data-shows-that-race-matters-in-the-covid-19-fight/">black people</a> were there as interns on what we call the &#8216;<a href="https://brazilian.report/business/2018/05/13/racial-inequality-brazil-jobs/">factory floor</a>,&#8217; rarely in leadership roles.&#8221;&nbsp;</p> <h2>Making space of black leadership in startups</h2> <p>The process of promoting and increasing diversity in fintechs is ongoing, but there is a long road ahead. While there are plenty of upcoming initiatives developed by black professionals for black professionals, the startup and fintech segment still has work to do to foster changes from the inside out.&nbsp;</p> <p>Since 2019, Brazilian fintech Nubank has an initiative called NuBlacks, defined as a &#8220;community to share experiences, to welcome and to create an environment for discussion and experiences related to afro-Brazilian culture,&#8221; according to the company&#8217;s website.&nbsp;</p> <p>But more important than generating discussions is to generate negotiations, by having goals and a dedicated budget, says Ms. Ribeiro. &#8220;When I say money, I mean many different things. First, investment in startups, in businesses led by black people. Then, investments in a more diverse value and supply chain, investments in educational programs within companies and investments to bring black professionals into leadership roles,&#8221; she explains.</p> <p>Another bottleneck mentioned by Ms. Ribeiro is the lack of data on diversity within fintechs and startups, making a more precise diagnosis of the situation difficult. Recently appointed to the role of head of diversity in the Brazilian Fintech Association (Abfintech), she plans on proposing a comprehensive survey of the segment as one of her first actions.

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Laís Martins

Laís Martins is a Brazilian journalist pursuing a master's degree in Media and Globalization. Her coverage is focused on politics, human rights, and society. Previously, she worked for Reuters Brasil.

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