British Business Bank launches £400 million initiative to back diverse and emerging fund managers
British Business Bank launches £400 million initiative to back diverse and emerging fund managers
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In a major move aimed at closing longstanding gaps in venture capital funding, the British Business Bank has unveiled a new £400 million initiative to support diverse and emerging fund managers across the UK. The programme, called Investor Pathways Capital, will officially launch in 2026 and is designed to improve access to finance for underrepresented investors and, by extension, the entrepreneurs they back.
The initiative comes amid growing calls for greater inclusion within the UK’s venture capital (VC) ecosystem, where disparities in funding persist despite increased awareness and efforts from both government and industry.
Delivered through three strategic pillars, Investor Pathways Capital aims to expand the pipeline of talent and capital in the early-stage investment space:
- Backing diverse fund managers through the British Business Bank’s Enterprise Capital Funds (ECF) programme.
- Investing in microfunds, enabling smaller and early-stage vehicles to deploy capital into startups.
- Providing support to partners who help aspiring investors build a track record, including those allocating modest sums to first-time fund managers.
The Bank has set a bold target for at least 50% of funding to be allocated to female fund managers, acknowledging the critical lack of diversity among current industry leadership. According to the latest Investing in Women Code report, only 2 pence of every £1 in UK venture capital goes to female-founded businesses, while just 13% of senior VC professionals are women.
“This initiative is a direct response to systemic barriers that have excluded talented fund managers and entrepreneurs based on gender, ethnicity, and background,” said Louis Taylor, CEO of the British Business Bank. “To deliver the Government’s growth mission, it is critical that our most promising entrepreneurs can access the finance they need—no matter who they are.”
Research cited by the Bank suggests that greater inclusion in VC could unlock significant economic potential. Investing in female and ethnic minority-led businesses could add up to 13% to the total value of the UK equity market, according to the Investing in Women Code report.
Taylor noted that underrepresented founders often face multiple hurdles—not only in raising capital but in even getting in front of the right investors. These challenges stem from limited access to professional networks, unconscious bias within investment committees, and the lack of diverse representation among decision-makers.
By supporting a new generation of fund managers who reflect the UK’s diversity, the Bank hopes to create a multiplier effect that reaches startups traditionally overlooked by mainstream finance.
As part of the broader strategy, the British Business Bank also announced it will double its current investment in female-led funds from £50 million to £100 million. This increased funding will target firms aligned with the UK Government’s eight key industrial growth sectors, including life sciences, clean tech, advanced manufacturing, and AI.
The move reinforces the Bank’s commitment as a founding signatory of the Investing in Women Code, a government-backed initiative designed to improve access to finance for women-led businesses. The 2025 Code report shows encouraging signs: 31% of venture deals by Code signatories last year involved companies with at least one female founder, well above the broader market average.
Industry observers have welcomed the announcement, noting that systemic change in the VC industry requires both financial commitment and intentional design.
“Capital is critical, but so is mentorship and track record building,” said one early-stage investor familiar with the initiative. “By backing emerging managers, especially those who’ve historically lacked institutional support, this programme could redefine who gets to allocate capital in the UK.”
The British Business Bank, which plays a central role in the UK’s economic development strategy, manages a portfolio of investments aimed at supporting entrepreneurs and small businesses. With Investor Pathways Capital, it is betting that democratizing access to capital at the fund manager level will ultimately broaden opportunity throughout the business ecosystem.
While the programme won’t officially launch until 2026, the Bank has indicated that work is already underway to identify partners, funds, and stakeholders who can help bring the initiative to life.
“This is about creating a more dynamic, more equitable, and more productive venture capital landscape,” said Taylor. “We’re investing in the future of entrepreneurship in the UK—and making sure that future is open to everyone.”
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