U.K. Business Bank Allocates £540 Million Towards a Diverse Venture Capital Scheme Nationwide
The British Business Bank has announced a groundbreaking £400 million initiative, Investor Pathways Capital, to support diverse and emerging fund managers across the UK. This initiative is part of a broader £500 million government package aimed at boosting growth and opportunities for underrepresented entrepreneurs.
The primary purpose of Investor Pathways Capital is to back diverse and emerging fund managers, particularly those from underrepresented groups, including women and marginalised communities. By doing so, the initiative aims to address long-standing inequalities in the investment ecosystem, promoting venture capital diversity and reducing industry biases and reliance on closed networks.
The programme operates across three pillars. It supports diverse fund managers through the Enterprise Capital Funds programme, invests in microfunds for small, early-stage ventures, and backs partners investing smaller amounts in talented individuals to help them build a track record and become investors. At least 50% of the investment from this initiative will be targeted towards female fund managers, aligning with research showing that female representation in venture capital firms correlates with increased investment in female-led businesses.
The initiative also includes the Invest in Women Taskforce, which aims to improve outcomes for female investors and entrepreneurs. The Taskforce is raising a £250 million ($337M) "Women Backing Women" fund of funds, making the British Business Bank's total commitment to investing in female-led funds £100M ($135M).
The Investor Pathways Capital initiative is expected to launch in 2026 and marks a decisive step towards creating a more inclusive future in the UK's venture capital industry. By supporting underrepresented entrepreneurs, it has the potential to unlock the UK's full commercial potential and boost the UK economy. Investing in female and ethnic minority-led businesses could add up to 13% to the value of the UK equity market, according to recent studies.
The programme's impact on the UK's venture capital landscape is significant. It aims to reduce the significant gap in venture capital investment for underrepresented founders and investors, which is currently persistent due to industry biases and limited diversity. Code signatories of the 2025 Investing in Women Code report are outperforming the broader equity market when it comes to backing female-led businesses, with 31% of venture deals going to companies with at least one female founder, compared to the market average of 4%.
Furthermore, the initiative has already shown promising results. In 2021, 9% of deals were in all-female founder teams, significantly higher than the 2% market average. Moreover, 5% of total deal value went to all-female teams, demonstrating a commitment to supporting women in business.
In conclusion, the Investor Pathways Capital initiative is a crucial step towards creating a more inclusive and diverse venture capital landscape in the UK. By supporting diverse fund managers, investing in microfunds, and backing partners, the initiative aims to transform the industry and increase diversity at all levels, ultimately boosting the UK economy and unlocking its full commercial potential.
- The British Business Bank's Investor Pathways Capital initiative, worth £400 million, aims to back diverse and emerging fund managers, particularly women and marginalized communities, to address long-standing inequalities in the investment ecosystem.
- The initiative will launch in 2026, investing at least 50% of the total funding towards female fund managers, in line with research showing increased investment in female-led businesses.
- The programme has already shown promising results, with 9% of deals in 2021 being in all-female founder teams, significantly higher than the 2% market average.
- By supporting underrepresented entrepreneurs and promoting diversity, the Investor Pathways Capital initiative could add up to 13% to the value of the UK equity market, boosting the UK economy and fostering a more inclusive personal-finance and business environment.
