The British Business Bank has invited investors at the earliest-stages to participate in its Microfunds scheme launched to encourage a diverse pool of new venture capitalists.
Part of the bank’s £400m Investor Pathways Capital initiative, Microfunds has been designed for first-time fund managers from a wide range of backgrounds looking to build an investment track record.
Investors with limited experience, personal capital or networks struggle to get a foothold in the industry, which leads to a less diverse pool of investors in the UK backing a less diverse range of companies.
The British Business Bank said it wants to address this by providing targeted support to solo general partners and teams looking to raise early-stage micro funds ranging between £5m and £20m.
“First time venture capital fund managers often face difficulty attracting sufficient commitments to raise a fund without already having an established investment track record,” said Christine Hockley, managing director and co-head of funds at British Business Bank.
“Investor Pathways Capital has been designed to address these challenges and helps unlock the UK’s commercial potential by establishing a more inclusive investment ecosystem that supports new and emerging talent, giving them the tools that they need to succeed.”
The bank will target a minimum of 50% of all investment to go to women fund managers, with research showing that a lack of female representation in investing reflects significantly on the lack of funding available for women founders.
“By lowering the barrier to enter investing, Microfunds will play a key role in helping more of the UK’s talented and ambitious fund managers take their first step and reach their potential,” said Minister for Small Business and Economic Transformation Blair McDougall.
“This will ensure that those of all backgrounds and demographics have the chance to grow their business and the economy.”
