The big news this week was yesterday’s Government announcement of a £400 million package to back investment fund managers from underrepresented backgrounds, as well as an extra £50 million into female-led funds to support the aims of the Invest in Women Taskforce.
From 2026, the British Business Bank will deploy a £400 million programme aimed at women, ethnic minorities, people with disabilities and communities from deprived areas. The initiative will expand its Enterprise Capital Funds so that more diverse managers can access early-stage finance, while also boosting investment in micro-funds of around £10 to £15 million – the first rung on the venture capital ladder for emerging investors.
Alongside this, the Bank will work with venture capital partners to provide modest capital injections and training for talented individuals who lack personal wealth or industry connections, helping them build a track record and break into investing.
This aligns very nicely with the sorts of arguments we’ve made through our Female Founders Forum, which we’ve been working on with Barclays for nearly a decade. Also, back in 2022, Anisah Osman Britton made the case for the British Business Bank supporting more diverse fund managers in a project we undertook with Morgan Stanley.
As Andy Davis, Co-Founder of 10x10, argued at the time:
“It’s probably unrealistic to force private angel-owned funds to change their behaviour. The way they invest is going to be at their discretion, and they are going to do what they want. But I do think the BBB [British Business Bank] is the answer. It should be made to invest in diverse fund managers. That’s the simplest and most straightforward solution.”
If these interventions are going to be a success, the British Business Bank needs to make sure the hands of the fund managers aren’t tied too tightly though. On that front, Leo Ringer at Form Ventures has a brilliant article on the many, varied and confused definitions of what it means to “back British businesses” across government and the rules that flow out of this.
For example, the Enterprise Capital Funds programme, which is where yesterday’s announced initiative sits, has recently swapped its “demonstrable UK benefit” rule for a tight four-part test. Funds now need a UK principal place of business and two-thirds of executives tax-resident here – conditions unseen in other policies – and they must hold a UK parent company. This collides with the rising trend of British founders placing a Delaware entity to woo US capital.
I recommend reading Leo’s article in full, which unpicks lots of definitional differences across the whole startup ecosystem.
Wealth of Knowledge
I know where our comparative advantage lies, so today I’ll draw just share a paragraph from the IFS’s statement in response to speculation that the Government might bring in a wealth tax:
“In practice, implementing a wealth tax would be difficult. It would require the government to set up a new administrative apparatus to value wealth – and valuation would be extremely difficult for some assets, such as private businesses: it is much easier to observe and tax the stream of income they generate. An annual wealth tax would need to apply broadly to all assets to ensure that it was not easy to avoid. Such a tax could raise significant revenue if it applied to the bulk of the UK’s wealth – that would include the homes and pensions of the middle class. Trying to raise large amounts of revenue from only the very wealthy would make the UK a less attractive place for those people to live.”
Get Connected
At the end of the month, we’ll host our second TEN x Connected.Ventures: Ecosystem Builders Meetup at the London School of Economics. This project is all about connecting the connectors, and we’re now committed to quarterly meetings of the group. Those who are accepted onto an event are also invited to join the WhatsApp group, which will hopefully grow into a way to reach the UK’s ecosystem builders in one place.
Clearly, we would be missing a trick to just do these in London, which is why we’re looking for partners to take this on the road. Get in touch if you’re as passionate about this as we are.