The British Business Bank Just Bet £90m on First Time Fund Managers. The Real Question Is Who Gets to Be a Gatekeeper.

Picture a founder in Bradford with a working product, early revenue and a plan to grow.

She has never raised institutional money before, knows no one who has, and has no warm route into a London fund. For years, the honest answer to whether she gets funded has been decided long before she opens her laptop to write a pitch. It is decided upstream, in a room she will never enter, where a small number of institutions choose which fund managers are credible enough to be given money to invest in the first place.

This is the part of the capital story that rarely reaches the headlines. We talk endlessly about which founders get backed and far less about who gets to do the backing. Yet the two are the same problem viewed from different ends. Capital reaches founders through fund managers, and fund managers are themselves selected by larger institutions. If that upstream gate is narrow, every founder downstream inherits the narrowness. New managers tend to see new people. A manager who came up through a community, an operator role or a regional network carries a different address book, and a different instinct for what a credible founder looks like, than one who came up through the same handful of firms everyone else did.

That is the gate the British Business Bank moved this week.

What happened

On 25 June the Bank named the first ten recipients of the Microfunds segment of its Investor Pathways Capital programme, committing up to £90m as a cornerstone investor.

The ten funds are

• Evertrue Capital,

• Common Ventures,

• Openseed VC,

• The Tech Bros Fund,

• Almanac Ventures,

• Future Impact Ventures,

• Blue Lake VC,

• Firstdoor VC,

• Mustard Seed Fund and

• Twin Track Ventures

Individual fund sizes range from £10m to £20m and all ten are led by first time institutional managers. They were chosen from 151 applications, and they will write first cheques at pre seed and seed stage across technology, deeptech, artificial intelligence, climate, defence and consumer.

The composition of the cohort is the part worth sitting with. More than half of the general partners are women, 57 per cent of the total, and 43 per cent are from ethnic minority backgrounds. The group includes what is described as the first Black led venture fund in the UK and across Europe focused solely on consumer brands, and a fund built specifically to back immigrant founders at their first institutional cheque. Investor Pathways Capital is a £400m programme, so this is the opening move rather than the whole game.

The problem, stated plainly

The numbers that explain why this matters are not new, and that is exactly the point. Around 2p of every £1 of UK venture capital goes to all female founding teams. Only about 10 per cent of senior investment professionals at UK VC firms are from an ethnic minority background. Research by Extend Ventures found that between 2009 and 2019 just 0.24 per cent of venture funding went to Black founders, and that over that decade only ten Black female entrepreneurs received venture capital at all. These figures have been quoted for years precisely because they have barely moved.

The usual response is to ask founders to fix themselves: network harder, find a warm introduction, get a name on the cap table. The Investor Pathways approach inverts that logic. It treats the selection of fund managers, not the coaching of founders, as the highest leverage point. Change who holds the cheque book and you change who gets seen, without asking a single founder to be anyone other than who they are.

Why backing the manager is the move

There is a structural reason this is smart. A first time manager raising a debut fund faces the same pattern matching that diverse founders do. Institutional money tends to flow to managers who look like the managers it has backed before, which means a strong investor with the wrong pedigree can spend years unable to raise, regardless of track record. Backing them as a cornerstone does two things at once. It puts capital into the hands of people who reach founders the incumbents miss, and it builds the very track record that lets those managers raise a larger second fund without a public institution holding their hand.

That compounding is the real prize. One £15m fund is useful. A manager who uses it to post a credible result, then raises £50m from private institutions on the strength of it, is how the gate widens permanently rather than for one cycle. The risk, and it is a real one, is that the follow on capital does not show up, and the cohort becomes a single generous moment rather than a durable shift. Whether the private market backs these managers for fund two is the question that will decide if this works.

Where capital is only part of the answer

It is worth being honest that not every overlooked founder is held back by a lack of money. Many are held back by a lack of access: a warm introduction, a credible signal, a door opened by someone the system already trusts. A more diverse layer of fund managers helps here too, because managers are also conduits of introductions, hiring, follow on relationships and reputation. First cheque capital is one input. The network that comes attached to it is often the one that compounds.

This is also where the longer arc of capital formation comes in. Getting funded is the start. Staying in control while you scale is the harder, less discussed half. Traditional rounds tend to transfer power along with money, through board seats, preferred terms and liquidation preferences, and that transfer falls hardest on founders who raised from a position of weakness because no one else would back them. Newer infrastructure is starting to offer alternatives. Tokenised equity paired with regulated secondary trading through the UK's emerging PISCES framework points toward a model where founders can raise incrementally and give early backers liquidity without surrendering the company in a single large round. None of this is settled, and it is one emerging answer among several rather than a guarantee. But it matters that the conversation about who gets funded is starting to join up with the conversation about who keeps control after they do.

An open question, and an invitation

The Bank has made the intervention that the data has argued for: stop asking founders to change, and change who chooses them. The open question is whether the market follows. Does cornerstoning ten diverse first time managers durably rewire who gets funded in Britain, or does it depend entirely on whether private institutions back those managers for their second and third funds? And does first cheque capital, on its own, reach the founders outside the major cities and networks who remain the least visible of all?

We would like to hear from the people living this. To the ten named managers, to the British Business Bank, to Extend Ventures and Diversity VC, to data houses like Beauhurst and Dealroom, and to founders who have raised from an emerging manager or been turned away by an incumbent: what would convince you this is a turning point rather than a moment?

Tell us in your own words and we will publish the range of views, including the ones that disagree.

Key takeaways

• The British Business Bank committed up to £90m on 25 June as cornerstone investor in ten first time microfund managers, the opening tranche of its £400m Investor Pathways Capital programme.

• The cohort is 57 per cent women and 43 per cent ethnic minority general partners, selected from 151 applications, and includes what is billed as the first Black led VC fund in the UK and Europe.

• The strategy targets the upstream gate, who gets to invest, rather than asking founders to change, which is the highest leverage point in the funding chain.

• The test of success is follow on: whether private institutions back these managers for fund two, turning a one off commitment into a permanent widening of access.

• Capital is one input among several. Networks, introductions and newer mechanisms such as tokenised equity and PISCES enabled secondary liquidity all shape whether founders can both raise and retain control.

Sources: British Business Bank press release, June 2026; EU-Startups; Tech Funding News; Extend Ventures Diversity Beyond Gender research.