£500m Boost for Underrepresented Entrepreneurs
Underrepresented investors and fund managers will benefit from £500m of Government backing to help high potential new entrants build the track record they need.
- £400 million package to back investment fund managers from underrepresented backgrounds and drive growth as part of the government’s Plan for Change.
- Additional £50 million for female-led venture capital funds, doubling the British Business Bank’s commitment to £100 million and supporting the Invest in Women Taskforce.
- New report reveals that angel investors are backing more all-female founding teams than all-male teams in the UK for the first time.
Diverse or underrepresented investors and fund managers will benefit from £500m of Government backing to help high potential new entrants develop the track record they need to become the investors of the future.
Targeted at women, ethnic minorities, people with disabilities and those from deprived backgrounds, there will be a new £400m package from the British Business Bank starting in 2026, which will operate across three pillars:
- Back more diverse fund managers directly through the Bank’s Enterprise Capital Funds programme, the Bank’s scheme to support early-stage businesses with high growth potential.
- Invest more in supporting micro-funds, funds with around £10-15m and the first step on the venture capital ladder for new investors
- Back partners, such as venture capital funds, to invest smaller amounts in talented individuals to build a track record and to provide training, giving those without personal wealth or connections the opportunity to become investors.
Research shows just 2p of every £1 invested in venture capital funding in the UK goes to female-founded businesses and only 13% of senior individuals on UK venture capital investment teams are women.
The initiative announced today aims to reduce the significant gap in venture capital investment for underrepresented founders and investors. It will target at least 50% of investment going to female fund managers.
By backing diverse and emerging fund managers, the initiative not only strengthens the UK’s venture capital ecosystem but also ensures that entrepreneurial ambition is no longer limited by background, gender, or geography. This targeted support will help build a more dynamic, inclusive economy that works for everyone.
Unlocking the potential of underrepresented entrepreneurs and breaking down barriers to opportunity will help drive growth as part of the government’s Plan for Change.
Chancellor of the Exchequer Rachel Reeves, said:
This is exactly what our Plan for Change is about: breaking down barriers to opportunity and kickstarting the growth that creates jobs and puts money into people’s pockets across the UK.
This £500 million investment will back diverse and emerging fund managers, making our economy stronger and more dynamic.
Louis Taylor CBE, Chief Executive Officer, British Business Bank, said:
To deliver the government’s growth mission it is critical that our most promising entrepreneurs can access the finance they need to grow their businesses, no matter who they are or what their background is. The UK equity market currently experiences a significant funding gap for diverse founders, negatively impacting their ability to start a business.
This new £400m Investor Pathways Capital initiative will support diverse and emerging fund managers across the UK, in turn supporting talented entrepreneurs currently underserved by the UK equity market. It has the potential to unlock the UK’s full commercial potential and boost the UK economy.
The initiative comes alongside an additional £50m investment into female-led funds to support the aims of the Invest in Women Taskforce, further expanding access to funding for female investors and entrepreneurs, taking the Bank’s total commitment to £100m.
The news comes alongside the latest Investing in Women Code report out today, which tracks and promotes investment into women-led businesses. It finds that investing in female and ethnic minority-led businesses could add 13% to the value of the UK equity market, underscoring the importance of backing diverse founders. The Code was launched in 2019 in response to the Rose Review’s findings that a lack of funding was one of the most significant barriers to women seeking to effectively scale a business.
There has also been promising progress for angel investment from Code signatories – those investing from their personal wealth – with all female investor teams and mixed-gender teams surpassing all male teams for the first time for investment received. Similarly, across all signatories, more female-only teams received funding than mixed-gender and all male teams.
However, more progress is still needed for investment in women businesses to meet its potential, with the total value of investments going into female led teams much less than that of all-male (15% vs 37%), with the remainder going to mixed teams.
Minister for Investment Baroness Gustafsson CBE said:
Women entrepreneurs have so much to contribute to economic growth, so it is encouraging to see progress in this year’s Code, with more female-led teams receiving investment than male for the first time.
Our Plan for Change is about boosting growth further and that’s why we’re taking action today to support high-potential female-led funds with an extra £50m of funding.
The report will be launched in a parliamentary reception attended by the Chancellor this afternoon.
Stakeholder quotes:
Hannah Bernard OBE, Head of Barclays Business Bank and Co-Chair of the Invest in Women Taskforce, said:
It’s heartening to see that once again IWC signatories are recognising the value of backing women-led businesses in the UK and are outperforming the broader market – proving that more diverse decision-making teams deliver better outcomes. We’re seeing real momentum in the number of women now shaping investment decisions, and the data shows this is directly linked to greater backing for female entrepreneurs.
That’s why programmes like the BBB’s new Investor Pathway Capital programme are so important and will help even more women break into Venture Capital. This is a core principle of the Invest in Women Taskforce – when you change who holds the capital, you change who gets funded.
The Investing in Women Code plays a vital role in helping us track progress and drive meaningful change across the wider industry and we urge more LPs to sign up and recognise the proven value of backing women. The Invest in Women Taskforce looks forward to deepening its partnership with the IWC to accelerate momentum and unlock the full potential of female entrepreneurs across the UK.
Michelle Ovens CBE, Founder, Small Business Britain, said:
Our country’s 5.45 million small businesses represent huge opportunity to power the UK’s economy forward, but the truth is that it is not always a level-playing field out there for entrepreneurs for many intersectional reasons.
So it is fantastic to see this new dedicated support package announced to help greater support flow towards under-represented entrepreneurial groups – like women, Disabled founders and those from ethnic minority backgrounds. We really applaud this effort and are keen to see the UK backing the rich diversity of British entrepreneurs as much as possible. It will undoubtedly bridge a big gap and has the potential to unlock tremendous growth and opportunity for us all.
Jenny Tooth OBE, Executive Chair, UK Business Angels Association, said:
We welcome today’s announcements from the British Business Bank. Backing underrepresented fund managers and doubling support for female-led VC funds are vital steps toward a more inclusive investment ecosystem.
This year, we saw that angel groups made more investment deals in all-female teams (42%) than in either mixed-gender or all-male teams – a powerful sign of change. These new initiatives will help build on that momentum, and work alongside more angel-backed innovation across the UK.
Check Warner MBE, Co-founder & Chair, Diversity VC, Co-Founding Partner, Ada Ventures, said:
To ensure the British economy is truly firing on all cylinders, we must find and back entrepreneurial talent from the widest possible pool. But if we don’t have representation at the investor level, the true potential of exceptional founders who don’t fit traditional moulds will continue to go untapped.
Building a more diverse cohort of emerging managers is a vital step en route to finding the best talent and driving outsized performance across a stronger tech ecosystem. At Ada Ventures, we’ve learnt from experience that a diverse investing team spots alpha founders that others miss.
It’s therefore encouraging to see a really meaningful and thoughtful package of interventions being announced by the Government and the British Business Bank today. This will be a key catalyst as Britain strives to become the best place in the world to start, scale and exit a business. I fervently believe that this ambition can go hand-in-hand with an equitable, diverse funding landscape that backs talent from all demographics and walks of life.
Shayan Chowdhury, Interim Managing Director at Newton Venture Program, said:
The most effective and enduring way to broaden access to capital for entrepreneurs of every kind is to cultivate an investor talent pool that reflects the diverse nature of society. That means opening up networks to a wider range of people and giving them the opportunity to participate, and thrive, in the venture capital ecosystem.
This £500m package is a huge step toward that. Allyship matters, but representation is what truly shifts outcomes, and building a more inclusive investor base is the most sustainable route to more equitable entrepreneurship.
Background
- The Fifth Investing in Women Code Annual Report can be found online here: Investing in Women Code reports – GOV.UK
- The Code commits signatories to:
- Adopt best practices to improve female entrepreneurs’ access to finance needed to start and grow successful businesses
- Nominate a member of the senior leadership team responsible for supporting equality in all interactions with entrepreneurs
- Provide annual funding data disaggregated by gender to DBT, based on agreed guidelines. Providing data and analysis helps to promote greater transparency across the industry, highlighting where measures are working and where further measures may be needed.
- To become a signatory, further information and an online sign up form are available here: https://www.british-business-bank.co.uk/investing-in-women-code/
About the British Business Bank
The British Business Bank is the UK Government’s economic development bank. Established in November 2014, its mission is to drive sustainable growth and prosperity across the UK and to enable the transition to a net zero economy, by improving access to finance for smaller businesses. Its remit is to design, deliver and efficiently manage UK-wide smaller business access to finance programmes for the UK Government.
The British Business Bank’s core programmes support over £17.4bn of finance to almost 64,000 smaller businesses.
As well as increasing the supply and diversity of finance for UK smaller businesses through its programmes, the Bank works to raise awareness of finance options available to smaller businesses. The British Business Bank Finance Hub provides independent and impartial information to businesses about finance options, featuring short films, expert guides, checklists and articles from finance providers to help make their application a success.
The British Business Bank is also responsible for administering the Government’s three Coronavirus loan schemes and its Future Fund, together responsible for delivering £80.4bn in finance to 1.67m businesses. These schemes are now closed to new applications.
https://www.gov.uk/government/news/500m-government-investment-to-boost-growth-and-opportunity-for-underrepresented-entrepreneurs