In a first for the UK, the British Business Bank (BBB) has launched an initiative to increase investment in underrepresented investors and founders — and doubled down on an existing initiative to back more female founders and fund managers.
The state economic development bank, which is a major LP in UK venture capital funds, has committed a fresh £400m to diverse and emerging fund managers; the first time it has specifically set aside capital for underrepresented investors. The BBB has also set its first gender target, with the initiative aiming to invest at least 50% of the capital into female fund managers.
The capital will be available via the new Investor Pathways Capital initiative, which is expected to launch in 2026.
The BBB has also committed an extra £50m to the Invest in Women Taskforce, an initiative set up to improve the outlook for female entrepreneurs in the UK. That doubles a previous £50m investment, bringing its total commitment to £100m.
The BBB, which was established in 2014, is currently an investor in over 140 funds via its Enterprise Capital Funds (ECF) and Patient Capital Funds programmes. In the last 10 years, the ECF programme has committed to 32 funds, of which 14 had a female partner at first close (44%). Recent female-led fund manager investments include Blume Equity, Thena Capital and Revaia.
Currently, just 2p of every £1 of VC funding in the UK goes to female-founded businesses, and only 13% of senior investors in the UK are women.
The new initiative will, alongside female fund managers, also back investors from ethnic minorities, those with disabilities and those from less well-off backgrounds, to help them build an investment track record and diversify the pool of experienced investors in the UK.
“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,” said chancellor Rachel Reeves in a statement.
Women backing women
The Invest in Women Taskforce is currently raising a £250m ‘Women Backing Women’ fund of funds, which will back female fund managers, who in turn will invest into female founders.
“The thesis is that a female investor is twice as likely to back a woman as a male investor, and that on the other side of the table, only 15% of senior investment professionals in the UK are female,” Debbie Wosskow, co-chair of the Taskforce, told Sifted in April. “So we know that women don’t hold the pens, and we also know that female GPs haven’t historically been backed.
“So we said ‘Okay, let’s create a pool of capital, run by a female-powered fund of funds manager, and let’s deploy that capital into backing female GPs, with a mandate for that money to go to women-led and mixed teams in the UK.”
Investing in female and ethnic minority-led businesses could add 13% to the value of the UK equity market, according to an Investing in Women Code report, released today.
“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,” said Check Warner, cofounding partner of VC firm Ada Ventures.
Update, July 10: This article was amended to include data on the percentage of ECF investments with a female partner.
Read the orginal article: https://sifted.eu/articles/british-business-bank-500m-diverse-fund-managers/
