The British Business Bank has opened applications for Microfunds as part of its new £400m Investor Pathways Capital initiative. Microfunds is dedicated to supporting very early-stage investors from a wide range of backgrounds in building investment track records and launching their first venture capital funds.
Intended for first-time fund managers, Microfunds aims to significantly broader and enhance access to capital and lower the barriers “to entering venture investing for those with: limited personal or closed-network capital; and / or limited connections to established Limited Partner networks.”
It aims to address various challenges, such as securing “cornerstone investors and raising commitments to establish an initial investment track record.”
The British Business Bank plans to address these barriers by offering more targeted support to solo general partners and teams looking “to raise early-stage micro funds ranging between £5 million and £20 million.”
The Bank will act as a cornerstone Limited Partner in these funds, giving high-potential investors the opportunity to “gain early fund management experience, expand their track record, and accelerate future fundraising momentum.”
As part of their commitment to improving access, the Bank will target at least 50% of all investment “to go to female fund managers who meet the initiative’s access-to-capital requirements.”
Research shows that there is a correlation “between female representation at venture capital firms and how much they invest in female-led businesses.”
Just 2p of every £1 invested in venture capital funding in the UK goes to female-founded businesses and “only 13% of senior individuals on UK venture capital investment teams are women.”
The 2025 Investing in Women Code report has “found that investing in female and ethnic minority-led businesses could add 13% to the value of the UK equity market, underscoring the importance of backing diverse founders.”
Christine Hockley, MD and Co-Head of Funds, British Business Bank said: that first time venture capital fund managers face challenges when attracting commitments to raise a fund without “having an established investment track record.”
These constraints restrict the ability of individuals to back high-growth businesses and limits progression towards “becoming long-term institutional-grade fund managers.”
Investor Pathways Capital has been designed to “address these challenges and helps unlock the UK’s commercial potential by establishing a more inclusive investment ecosystem that supports new and emerging talent, giving them the tools that they need to succeed.”
Mark Sims, Senior Director of Funds, British Business Bank said that the British Business Bank “has a strong track record in supporting emerging fund managers through its Enterprise Capital Funds.”
With this initiative, they aim to support more funds that are said to be dedicated to UK startups as well as more early-stage businesses. In doing so, they now intend to enable additional investment into the local VC market and build a “stronger investment ecosystem.”
Blair McDougall, Minister for Small Business and Economic Transformation, said that by lowering the barrier to enter investing, Microfunds will “play a key role in helping more of the UK’s talented and ambitious fund managers take their first step and reach their potential.”
This is said to be the latest step in the delivery of their Industrial Strategy and should open up growth opportunities by “encouraging a flow of capital to a wider group of entrepreneurs.”
This will ensure that those of all backgrounds and demographics “have the chance to grow their business and the economy.”
As noted in the update, the Investor Pathways Capital initiative will now aim to back underrepresented, first-time fund managers “raising UK-domiciled venture funds with a total fund size between £5 million and £20 million.”
As clarified in the announcement, applications can only be made by prospective managers “raising their first fund and cannot be made by companies seeking to access finance.”
Before entering the application process, prospective managers need to first complete the pre-application form.