Venture capital investment remains low for women and ethnic minorities
Research from the British Business Bank found there has been no improvement in the share of venture capital investment to female founder teams over the past decade.
A new report revealed that women, people from ethnic minorities and those from lower socio-economic backgrounds are significantly less likely to receive venture capital investment compared to their male or white counterparts, or those that went to ‘elite’ universities.
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The share of total equity investment by value for all-female founder teams remained stagnant with only two per cent receiving funding, reflecting no improvement since 2011. 13 per cent of first-time equity deals went to all-female founder teams in 2022 and even less went to all-ethnic minority teams at ten per cent.
“The journey of raising venture capital can be challenging – but for underserved entrepreneurs, the barriers can be far higher and this needs to change,” said Louis Taylor, chief executive of the British Business Bank.
“Our ‘Finding What Works: Pathways to Improve Diversity in Venture Capital Investment’ report provides clear, actionable, and evidence-based pathways for UK funds to improve diversity in investment, which I hope will stimulate both discussion and action to improve outcomes for diverse entrepreneurs and the wider UK economy.”
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To reduce barriers to investment faced by diverse teams, the British Business Bank has identified three clear, actionable and evidence-based pathways for UK funds to improve diversity in venture capital investment.
Findings from the survey suggest that increasing diversity at the top can lead to better investment decisions, free from biases that may be typical for a single homogeneous group. Fostering inclusion in the investment pipeline through networking and increased transparency and accountability among venture capital firms are also key to delivering change and enhancing diversity.
“Together, we can create the systemic change needed to unlock the full potential of talented UK entrepreneurs, wherever or whoever they are,” added Taylor.
Established in November 2014, the British Business Bank is the UK government’s economic development bank. Its mission is to drive sustainable growth and prosperity across the UK and to enable the transition to a net zero economy, by improving access to finance for smaller businesses.
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