British Business Bank to support diverse, emerging fund managers with £500m

The British Business Bank has committed £500m to support UK-based diverse and emerging fund managers.

This includes creating a new £400m Investor Pathways Capital initiative, which will support diverse and emerging fund managers across the economy and make it easier for new entrants, particularly those from underrepresented groups, to break into venture capital (VC).

The initiative, which is expected to launch in 2026, will operate across three pillars. It will:

• back more diverse fund managers through the British Business Bank’s Enterprise Capital Funds programme;
• invest in microfunds to support small, early-stage funds;
• back partners investing smaller amounts in talented individuals to build a track record, giving them the opportunity to become investors.

The Bank said the initiative aims to reduce the “significant” gap in VC investment for underrepresented founders and investors due to industry biases, reliance and closed networks, and limited diversity among investors. It added that the initiative will target at least 50% of investment going to female fund managers.

According to the Bank, research shows that just 2p of every £1 invested in VC funding in the UK goes to female-founded businesses, and only 13% of senior individuals on UK VC investment teams are women.

The 2025 Investing in Women Code report has found 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.

Earlier this week, the Bank committed to supporting the aims of the Invest In Women Taskforce by investing £50m into female-led funds through its existing programmes.

The Bank today said it will increase this commitment by investing a further £50m into female-led funds that are aligned with the eight growth-driving sectors of the Industrial Strategy, taking its total commitment to £100m.

Louis Taylor, chief executive officer of 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.”

Taylor said 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,” he added.

Read the digital edition of IPE’s latest magazine