British Business Bank backs diverse and emerging fund managers with £500m package
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 £500m 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.