VC welcomes £500m investment to boost growth for underrepresented entrepreneurs

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, it was announced today.

One VC welcomed the move, saying: “If Britain is to compete then it must unlock the full breadth of its entrepreneurial talent.” But one financial expert said “the real issue for the government is getting more competitive at attracting seed start-ups in growth industries to stay in the UK and not migrate across the pond”.

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 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 intends to strengthen the UK’s venture capital ecosystem but also ensure that entrepreneurial ambition is no longer limited by background, gender or geography. 

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"

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"

Suzanne Ashman, General Partner at LocalGlobe, welcome the move saying: “If Britain is to compete then it must unlock the full breadth of its entrepreneurial talent. Too often, exceptional founders who fall outside the conventional mould go unnoticed.

"Diverse investors back founders others overlook and, in doing so, uncover opportunities others miss. This isn’t about optics, it’s about performance. So it’s encouraging to see the Government and the British Business Bank announcing a serious, well-considered set of measures to address this imbalance. They should help the UK not only remain one of the best places to start and scale a business, but also become one of the fairest.”

Samuel Mather-Holgate, Independent Financial Adviser at Mather and Murray Financial, said “the venture capital program in the UK needs a massive shake-up”.

He added: "Companies here find it nearly impossible to get funding compared to their peers in the United States. This is a good idea, and should make a real difference to those who are under-represented, but the real issue for the government is getting more competitive at attracting seed start-ups in growth industries to stay in the UK and not migrate across the pond.”