British Business Bank Announces $540M Fund for an Inclusive VC Future in the UK

The British Business Bank has announced a new $540,000 million (£400m) initiative to support diverse and emerging fund managers across the economy.

Backed by Investor Pathway Capital, the project is part of a broader $675,000 million (£500m) government package. The program, expected to launch in 2026, aims to transform the UK’s venture capital landscape and increase diversity at all levels.

Building a More Inclusive Future

This move marks a decisive step towards addressing longstanding inequalities in the investment ecosystem. It particularly aims to support women and underrepresented groups. These groups include marginalised communities, individuals with disabilities, and those from disadvantaged backgrounds.

Related Post: Britain’s First Black-owned Unicorn Marshmallow Attains $2B Valuation with $90M Funding

The Investor Pathways Capital initiative will operate across three pillars. It will back more diverse fund managers through the British Business Bank’s Enterprise Capital Funds programme. 

Additionally, it will invest in microfunds to support small, early-stage ventures. Furthermore, it will back partners who invest smaller amounts in talented individuals, enabling them to build a track record and ultimately become investors.

The initiative aims to reduce the significant gap in venture capital investment for underrepresented founders and investors, which is largely due to industry biases, reliance on closed networks, and limited diversity among investors. It will target at least 50% of the investment to female fund managers.

A Correlation Between Female VCs and Female-led Businesses

There has always been a correlation between female representation at venture capital firms and how much they invest in female-led businesses. Just 2 pence of every £1 invested in VC funding in the UK goes to female-founded companies, and only 13% of senior individuals on UK VC investment teams are women. 

The 2025 Investing in Women Code report showed 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.

Related Post: Top London-based Investors Investing in Black Founders

Louis Taylor, 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.”

In addition, she said, “This new  £400M ($540M) 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.”

British Business Bank is Backing an Equitable Future

The Bank has already committed to supporting the aims of the Invest in Women Taskforce by investing £50M ($67M) into female-led funds through its existing programmes. Now the Bank will increase this commitment, investing a further £50M ($67M) into female-led funds that are aligned with the eight growth-driving sectors of the Industrial Strategy.

These eight priority sectors include advanced manufacturing, clean energy, creative industries, defence, digital and technologies, financial services, life sciences, and professional and business services. This takes the British Business Bank’s total commitment to £100M ($135M), further expanding access to funding for female investors and entrepreneurs.

Related Post: Meet 15 Black British Entrepreneurs Making Waves

Moreover, the £100 million ($135M) commitment forms a key component of the broader Invest in Women Taskforce, an initiative designed to improve outcomes for female investors and entrepreneurs. The Invest in Women Taskforce is also raising a £250 million ($337M) “Women Backing Women” fund of funds, which will back female general partners who, in turn, invest in women-led and mixed teams.

The newly released 2025 Investing in Women Code report paints a hopeful picture. It shows that Code signatories are outperforming the broader equity market when it comes to backing female-led businesses. Specifically, 31% of venture deals by signatories went to companies with at least one female founder. 

Additionally, 9% of deals were in all-female founder teams, more than double the wider market rate of 4%. Furthermore, 5% of total deal value went to all-female teams, significantly higher than the 2% market average.

Main  Photo Stock IImage