10-07-2025
Female founders get more support to foster a ‘dynamic' economy
The government has stepped up its support for female business founders and those from diverse backgrounds, releasing £450 million in funding, half of which it said would be invested by female fund managers.
The British Business Bank (BBB), the economic development agency, will make the cash available from the start of next year. Rachel Reeves, the chancellor, said the move was about 'breaking down barriers to opportunity' to make the 'economy stronger and more dynamic'.
Research shows just 2p of every £1 invested in venture capital funding in the UK goes to female-founded businesses, with the rest going to mixed gender or all-male teams, and only 13 per cent of senior individuals on UK venture capital investment teams are women.
The funding decision comes as a separate government initiative, the Investing in Women Code, found that for the first time all-female business founder teams landed more funding deals from progressive business angel investing groups than all-male teams. The data was drawn from the signatories of the code, which commits them to support female entrepreneurship. In total 290 organisations have signed up, including 215 venture capital firms and half of all UK business angel investment groups.
However, the total value of investments going into female-led teams from the code's signatories remains lower than that of all-male teams, at 15 per cent of the total, compared with 37 per cent for all men.
The BBB said that £400 million of new investment funding would back fund managers from 'underrepresented backgrounds', under the premise that investors from diverse backgrounds are more likely to back founders with similar characteristics.
The funding will also provide training for female angel investors who want to launch their own funds. At present only a few have been approved to run funds under the government's Enterprise Capital Funds initiative, with one industry insider saying that some have been stuck in a queue for approval for two years.
'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,' said Louis Taylor, the British Business Bank's chief executive. 'The UK equity market currently experiences a significant funding gap for diverse founders, negatively impacting their ability to start a business.'
The BBB has also made an additional £50 million available to support female-led fund managers through the Invest in Women Taskforce, taking the total it has committed to this initiative to £100 million.
Baroness Gustafsson, the investment minister and former chief executive of the cybersecurity firm Darktrace, told MPs last week that a £250 million fund associated with the taskforce would start investing by the end of the year. 'Women entrepreneurs have so much to contribute to economic growth, so it is encouraging to see progress,' Gustafsson added.
