The objective of this study is to provide evidence on what works to improve diversity in venture capital investing, suggesting pathways and actions that can be adopted by the UK venture capital industry and promoted by the British Business Bank.
We focused primarily on three diversity characteristics: gender, ethnicity and education as a proxy for socio-economic status (we also recognised other characteristics, where relevant)1 .
All characteristics, especially those protected by the Equality Act (2010), are relevant to the venture capital industry, as in any other community or commercial setting. The scope of this research focuses on gender, ethnicity, and socio-economic status for three main reasons: they play an important role in founders’ ability to access venture capital investment; they are often more visible or easily identifiable; and there is sufficient literature and data available to support an understanding of the barriers experienced because of these characteristics (and to potentially monitor change).
This is not to the exclusion of any other diversity characteristic; the British Business Bank report 'Alone, Together', published in 2020, set out the profound and intersectional impact on businesses outcomes of not only gender, ethnicity, and socio-economic background, but also place, income, age, deprivation, and disability and ill health. The British Business Bank will continue to lead and commission research on diversity in small business finance with increasing scope, to shape debate and action on this topic.
The British Business Bank has looked extensively at place-based gaps in access to finance and how to unlock the potential of entrepreneurs across the UK nations and regions, including through publications such as our Nations and Regions Tracker 2022. This will continue to be an ongoing area of analysis, with the 2023 tracker due to be published in the autumn.
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Other characteristics included: nationality, geography and age.