New £500m fund to target “underrepresented” founders

It’s no secret that women face an uphill battle in securing venture capital funding. Studies show that female tech founders need, on average, twice as much experience to receive the same amount of success as their male counterparts. 

In a push to address the injustice, the government has announced a £500m investment to improve representation within the sector. The initiative will support women, ethnic minorities, people with disabilities, and those from deprived backgrounds.

It aims to help promising new investors establish themselves in the industry. By levelling the playing field for diverse fund managers, the initiative will likely create more opportunities for founders from underrepresented backgrounds to access capital.

What is the new VC fund — and who is it for?

The new VC fund is largely made up of a £400m package from the British Business Bank, which fund managers will be able to access from 2026.

The initiative has three core aims:

• Support diverse fund managers directly through the Bank’s Enterprise Capital Funds programme, a scheme to help early-stage businesses with high growth potential enter the sector
• Invest in more micro-funds (funds with around £10-15m), the first step on the VC ladder for many new investors
• Support VC funds in offering training to promising individuals, to help those who aren’t from wealthy and connected backgrounds become investors

There’s an additional £50m pledged for female-led venture capital funds, which doubles the British Business Bank’s commitment to £100m, supporting the Invest in Women Taskforce.

A major priority of the initiative is working towards closing the gender funding gap; at least half of the funding will be directed towards female fund managers. 

The long-term goal is to support diverse and emerging investors who can help reshape the industry from the inside out, in doing so, supporting more female-run businesses. 

By broadening who gets to award funding, the programme opens doors for more underrepresented founders to get financial backing for their venture.

Why this matters for women founders

At present, there is a stark lack of diversity across the funding landscape. The government states that just 2p of every £1 in UK venture capital goes to female founders. And only 13% of senior investors in UK VC firms are women.

This highlights the glaring imbalance and the likely link between the lack of diversity at the top and the challenges female founders face in securing investment.

In this year’s 2025 Startups 100 Index, we found that businesses without a female founder received, on average, 3.3x more than businesses with a female founder.

It’s a similar story for ethnic minorities. Black Seed VC, Karl Lokko says, “only 0.24% of venture capital was allocated to Black founders over the past decade,” underscoring how urgently the sector needs to change.

The new fund is a both a symbolic and practical response, a recognition that innovation doesn’t come from working with only one type of founder. 

Ensuring founders from every background can grow their business expands the range of ideas, perspectives, and solutions that enter the market.

As Suzanne Ashman, General Partner at LocalGlobe, puts it: “If Britain is to compete, then it must unlock the full breadth of its entrepreneurial talent. Too often, exceptional founders who fall outside the conventional mould go unnoticed.”

How you’ll benefit as a founder

While the programme is primarily focused on increasing diversity among fund managers, there’s a strong chance its impact will ripple outwards. 

As a more representative group of investors enters the field, high-potential startups, particularly those led by underrepresented founders, stand to gain better access to VC. 

With the initiative expected to roll out from 2026, now is a great time to start building relationships, keeping an eye on announcements, and preparing to apply when opportunities crop up.

In the meantime, we have plenty of resources to help you find and secure alternative funding, such as our guide to the best small business grants.