Assessment Criteria

This section outlines the key assessment criteria the Development Equity Funds team uses to assess proposals.  

The criteria are grouped under six broad headings to help applicants understand expectations, and a strong application will show strength across all:  

• Access to Capital
• Team & Expertise
• Investment Strategy
• Track Record
• Terms & Structure
• LP Commitments

We do not expect all information to be available at the early stages. Clear guidance will be provided on what is required at each stage, and information will be requested progressively as proposals move through the process (for further detail see Application Process). 

Access to Capital

Microfunds is designed to support high-potential individuals raising their first venture capital fund, who have tried to raise a fund and encountered personal and systemic barriers.  Assessments of access to capital will be guided by the following:

• None or limited access to capital;
• None or limited access to Limited Partner (LP) networks.  

These indicators help us understand how a proposed management team’s access to capital may have influenced their ability to raise a venture fund. We are interested in learning about the key personal and systemic barriers applicants have encountered in raising a venture fund, and evidence of the steps taken to overcome these.

Team and Expertise  

Applicants may apply as solo General Partners (GPs) or as part of a team. If applying as a team, applicants will also need to demonstrate that the team will be able to work together effectively for the life of the fund.  

Assessment will focus on whether the team can demonstrate:  

• Relevant experience and expertise that directly supports the investment strategy;
• Clear roles and responsibilities of each team member within the fund, and any external advisors or part-time contributors you intend to involve in supporting operations;
• Sufficient time commitment dedicated to managing the fund and supporting portfolio companies.

Investment Strategy

Applicants will need to clearly articulate their investment strategy, covering:  

• Investment thesis, highlighting the core rational behind the decisions;
• Target sectors or industries, preferred investment stages, geographical focus, and key differentiators;
• Your unique deal flow in line with the proposed investment strategy, including sourcing channels and expected deal volume across your funnel;
• Approach to evaluating and conducting due diligence on potential investments;
• Proposed value add activities for portfolio companies, aligned with the fund’s size, focus, and resources;
• Proposed portfolio construction, including number of investments, average ticket size, ownership percentage, and initial versus follow-on ratio.

Applicant’s investment strategy should be driven by commercial considerations. We strongly value strategies that are well-matched to the team’s skills, networks, and experience.

Microfunds are expected to focus predominantly on UK-based companies, with a guideline of no less than 65% of investments to be into UK businesses.  

Track Record

Prior experience managing institutional funds is not required and conventional investment track records are not expected. We welcome details from a wide variety of backgrounds, highlighting any professional and personal experiences, lessons learned, and examples that illustrate your ambition to manage a microfund.  

During cohort 1 we observed several common archetypes among applicants. These examples are illustrative rather than exhaustive and applicants do not need to fit neatly onto one profile. We welcome applications from individuals from a wide range of backgrounds and expect additional profiles to emerge in future cohorts.

• The Community Builder – individuals with deep roots in a specific founder community, enabling them to identify promising businesses ahead of the broader market. Their differentiation comes from trusted relationships and proximity to high-potential opportunities.
• The Operator – experienced founders, operators, or ecosystem participants who bring deep sector expertise, strong founder empathy, and the commercial judgement to identify, pick, and support promising founders and high-potential businesses.
• The Emerging Investor - individuals with experience as scouts, venture partners, principals, or other investing roles, who have developed strong investment judgement but have not yet had the opportunity to establish and manage their own fund.  

Terms & Structure

Applicants should outline their proposed fund terms and structure. The Development Equity Funds team will assess, among other things:  

• Fund structure
• Fund domicile
• Fund life  
• British Business Bank funding request
• A management fee, set at a level that is just sufficient to enable the fund manager to invest and manage the fund effectively; and
• Carry hurdle percentage/multiple  
• Target close date

LP Commitments

The British Business Bank will provide a cornerstone commitment of up to 50% of the total fund size. The other 50% will need to be raised from other Limited Partners.

Applicants will be asked to demonstrate their approach to fundraising: the types of investors they hope to engage, the rationale for targeting those groups, and the steps they plan to take to build credible relationships and reach the target fund size.

ESG Considerations

Applicants should consider how environmental, social, and governance (ESG) considerations will be integrated into their investment process, fund operations, and approach to supporting portfolio companies.