Finding What Works: Pathways to Improve Diversity in Venture Capital Investment

Report and publications 04 July 2023

Our Finding What Works report, undertaken by the British Business Bank in partnership with SQW, provides three clear, actionable, and evidence-based pathways for UK funds to improve diversity in venture capital investment which we hope will both stimulate discussion and action to improve outcomes for underserved entrepreneurs and the wider UK economy.

Key findings

This research has found three pathways for enhancing diversity in venture capital firms that want to invest in more underserved founders.

Diversity at the top

  • These firms focus on increasing diversity among key decision makers, particularly the Investment Committee. A broader range of views ‘at the top’ can result in a larger number of investments into underserved founders.

Inclusion in the investment pipeline

  • These firms place a greater emphasis on increasing the pipeline of investment opportunities from underserved founders. They actively seek out diverse founding teams in various ways, for example, engaging scouts with their own diverse networks to source investment opportunities, and using incubators and accelerators for earlier stage firms.

Transparency and Accountability

  • These firms subscribe to the notion that ‘what gets measured gets done’. They view accountability for measuring and delivering progress as essential, supported by strong emphasis on external communication, genuine commitment, and active participation in industry-wide data collection.


This report advises venture capital firms to choose a pathway that aligns with their goals, take consistent and meaningful action, and monitor progress. Joining industry initiatives like the Investing in Women Code and the Diversity VC Standard can provide support. For entrepreneurs, it is recommended to seek venture capital firms that have an investment thesis matching their business and actively seek feedback and referrals. Impact measurement should be more rigorous, evaluating the effectiveness of actions for different groups and types of firms. In-depth research on barriers and support would drive the industry's adoption of actions.

Recommendations for venture capital firms, entrepreneurs, and impact measurement


Venture capital firms should consider the pathways set out in the report, and choose an approach that works for them


Venture capital firms should commit to their approach over a sustained period, and track and monitor progress


Entrepreneurs should look for venture capital firms to back their companies that have an investment thesis that matches their business


Entrepreneurs should actively seek feedback and further referrals


Further evaluation of actions should be undertaken to assess whether they are more/less effective for different groups of entrepreneurs and venture capital firms


Actions should be more rigorously evaluated to formally assess their impact on diversity outcomes and to understand barriers to actions

How the British Business Bank is taking action

As the largest domestic investor in UK venture and venture growth capital, the British Business Bank is committed to unlocking potential by ensuring equity in opportunities and support for all talented entrepreneurs and would-be entrepreneurs across the UK. We do this through through the investments we make, through our own internal practices, and through our capacity to shape the attitudes and actions of the wider market. The Bank is committed to a range of actions in line with the findings of this report to help achieve this:

Dissemination and industry engagement: 

The Bank will share the report findings with the venture capital industry and wider ecosystem. Support will be provided to partners and funds to adopt diversity and inclusion approaches.

Tracking actions through the Investing in Women Code: 

The bank will track effectiveness adoption and effectiveness of actions through the Investing in Women Code.

Transparency in portfolio diversity: 

The Bank will request its delivery partners to report on the diversity of their organizations and funding recipients. Starting from 2024, this data will be publicly reported alongside other market research and publications.

Diversity among senior leadership: 

The Bank is committed to achieving and maintaining 50% gender diversity among senior leaders. New targets for ethnic diversity and diversity principles for Investment Committees will also be established and voluntary ethnicity pay gap reporting.

Diversity in investment teams: 

The Bank has implemented an inclusive leadership program and a Diversity Dashboard to monitor key metrics and promote diversity. We recruit for capabilities rather than experience.

Internal accountability and continuous improvement: 

The Bank is committed to reporting progress on diversity objectives, assessing performance, and continuously improving its practices as part of our focus on unlocking potential.

Finding What Works:

Pathways to Improve Diversity in Venture Capital Investment

Read the report