This leaves founders who are women, racially minoritised, disabled, LGBTQ+ or from financially disadvantaged backgrounds significantly under-represented when it comes to equity finance. And without early-stage venture backing, these entrepreneurs are missing out on valuable opportunities to expand their businesses and create groundbreaking new technologies. On the other side of the table, diverse teams have an inherent competitive advantage that many venture partners are currently missing out on. 

Recent social and political events have shifted the conversation of diversity to the forefront, and made it impossible for business leaders in any industry to ignore. But while a huge number of VC funds, corporate investment firms and angel networks are pledging to diversify their deal flow, and support a broader range of entrepreneurs, it remains to be seen if – on an industry-wide level – this is any more than lip service. 

Some venture funds, however, really are putting their money where their mouth is, and only backing under-represented founding teams at high-growth firms. 

Whether you’re an entrepreneur looking for funding, or an investment associate seeking to learn about diversifying deal flow, here’s a snapshot of some of the UK’s most active diversity-focused funds.

Named after one of the first female computer scientists, Ada Lovelace, Ada Ventures is a VC firm that backs under-represented founders building technology companies in the UK. It was launched in 2018 by seasoned VC partners Check Warner (co-founder of non-profit Diversity VC) and Matt Penneycard, and has $34m (£30m) to invest. 

The fund invests pre-series A, typically when the investee is post-product, pre-revenue, and states that its first investment into a company is between £100,000 and £1m.

One of the most active funds on this list, Ada Ventures has backed at least 15 companies since launch. It has most recently invested in the Tooth Fairy App, for video-calling dentists on demand; Huboo, which provides fulfilment services to e-commerce businesses; and SideQuest, which operates an online games website allowing users to download new applications for Oculus VR products.

Angel Academe is an angel network that aims to get more women involved in investing, while also increasing the amount of capital invested into technology businesses with at least one woman in the founding team. Although it exclusively invests in women-led start-ups, the network is open to members of any gender. It considers all types of technology, but has a history of backing fintech, healthtech, edtech and big data. 

Time and time again, research such as the 2019 Alison Rose Review of Female Entrepreneurship, and Beauhurst’s own research on gender diversity in the high growth space, has found that women are less likely to start a business than men, and are routinely overlooked in the investment process.

As well as exclusively backing female-founded businesses, Angel Academe also specifically backs early-stage companies that qualify for the Enterprise Investment Scheme and/or Seed Enterprise Investment Scheme, with a pre-money valuation between £1m and £10m. It typically invests between £50,000 and £350,000, and encourages its members to provide active support to portfolio companies.

The network has backed 35 tech start-ups and scaleups, including Software as a Service (SaaS) start-up Muse Finance, which allows small businesses to manage their cash flow; cyber insurance firm Bewica; and soft drinks companies Nix & Kix. The network has backed two companies to an exit: BuyMyWardrobe, an online marketplace for second-hand designer items, was founded by Kal Di Paola in 2011 and acquired by Hardlyeverwornit.com (now HEWI) in 2018; while BuddyBounce, a social network for music artists and fans, was founded by Emma Obanye and Giulia Piu in 2011 and acquired by Crowdmix in 2016. 

Angel Academe has been active since 2014, and was co-founded by CEO Sarah Turner and COO Simon Hopkins. Sarah first started investing in 2012, and has since backed 20 companies. When asked what progress has been made in opening up investment for women, Sarah told us: 

“We’ve seen a massive change since we started investing in female founders in 2014. The lack of diversity in the sector has become part of the conversation for a start, and it’s rare to see an all-male investor panel or audience any more. More investment is going to female founders and more women are investing too, both through VC firms and angel investing.

“But more needs to be done. Women-led businesses still typically raise less money at lower valuations, and it takes them twice as long as businesses with male CEOs, especially when they operate outside traditionally female-dominated sectors.”

CGV is a London-based angel network that invests in and supports pre-seed and seed stage start-ups led by under-represented founders in the UK. It specifically invests in companies where 25% of the start-up’s founding team are from under-represented backgrounds. CGV typically invests between £25,000 and £50,000, and also provides a range of support services, such as strategy consultancy.

The fund focuses investment into software businesses which are building an MVP (minimum viable product), showing early indication of demand (through revenue growth, paid pilots or customer acquisition), and have a possible £10bn+ market size. 

CGV’S current portfolio includes Afrocenchix, which develops vegan, organic hair care products for consumers with Afro hair (a company also backed by Cornerstone Partners); and Freyda, a Hackney-based start-up that develops software that aims to automate data entry and analysis for financial services.

Built out of a desire to empower and create more diversity in the UK business market, Cornerstone Partners is the first angel investor network solely investing in businesses owned by Black and diverse founders. 

Black founders are a group that is particularly impacted by bias in the VC and private equity industry, according to fellow fund Salonica Maroon’s recent research. The survey of over 500 business owners saw 40% of Black entrepreneurs name persistent racism as a contributing factor in their inability to secure funding, compared with 32% of Asian entrepreneurs.  

More than three quarters of Black business owners also agreed that minorities are less favourably treated by investment companies, as did 62% of Asian entrepreneurs and 59% of mixed ethnic minority groups.

Drawing on data from the Beauhurst platform, Cornerstone’s own report, Access to Venture Capital, confirmed that these experiences follow through to the allocation of funding, with just 1% of pre-VC and 3% of VC-funded founders identifying as Black. 

Cornerstone co-founder Stephen Boakye tells us that the angel network sees between 300 and 400 businesses a year. And when it comes to the difference between pitching to a traditional fund versus a diversity-focused firm:

“Founders have told us that they instantly feel more comfortable pitching to people that look like them, who can share and understand experiences predominantly found within ethnic minority communities. And that’s really important, because these experiences usually play a key role in the birth of the idea of the business.

“This also results in founders being more relaxed and at ease when pitching, allowing for a more comfortable environment, and, overall, a better pitch.”

Cornerstone’s portfolio includes market research company Tectonic; e-commerce fulfilment service Hutch Logistics; and fitness class provider Boxx. Its most recent round took place at the end of September 2021, when it led a seed funding round into PlusHeat, a start-up that offers emergency home and boiler insurance services.

GOODsoil is a VC firm that invests in pre-seed and seed-stage companies based in Europe and sub-Saharan Africa. The fund backs founders from diverse backgrounds who are working to build businesses with a global reach that also aims to benefit communities, specifically through innovations in the mobile, internet, software and fintech sectors. 

Ticket size ranges from £50,000 to £250,000, and the fund also offers access to its team of founders, operational experts and investment professionals, in order to help its portfolio companies to scale. The fund’s website currently mentions eight portfolio companies, including UK start-ups Steelo Style and Vitae London, although we’ve been unable to confirm these investments.

Impact X provides funding to under-represented entrepreneurs across Europe, particularly the Afro-Caribbean diaspora. Each of its team members are seasoned investors, advisers and serial entrepreneurs from ethnically diverse backgrounds. The VC fund invests across a wide range of industries, such as digital and technology, healthcare and lifestyle, and media and entertainment. 

To be considered by the fund, companies must have a strong growth potential, including a large market opportunity with demonstrable customer traction, a differentiated and defensible competitive position, exceptional job creation potential, and the ability to positively impact lives on a global basis. 

Although it is yet to support a company to exit, the fund explicitly seeks businesses with compelling exit opportunities. With £100m to invest, Impact X operates at a slightly later stage than most of the other funds on this list, backing companies at seed, series A and series B stages.

Portfolio companies include Pace, a company that uses artificial intelligence (AI) technology to optimise prices for hotels; and Raylo, which operates a mobile network offering cheaper and greener tariffs by asking users to give back their phones at the end of their contract.

January Ventures is an early-stage venture fund, investing in visionary female founders who are creating the next generation of big tech companies. Founded in 2018, the fund is based between Boston and London. 

It invests in the US and Europe in pre-seed and seed-stage tech companies, focusing on the future of work, health and the commerce sector. Companies in January Ventures’ portfolio include sexual wellness app Kama; AI firm Unitary; and DNA sequencing service provider Sano Genetics.

Kaleidoscope Investments (Ki) is a VC fund that backs start-ups with a person with a registered disability within their founding team, or is focused on a disability-related objective. It’s run by Hardeep Rai, whose son has cerebral palsy, along with Shane Bratby, who has a long-term disability himself. 

The fund typically invests between £10,000 and £250,000, in exchange for an equity stake between 2.5% and 25%. As well as financial support, Ki provides ongoing help and expertise to entrepreneurs, nurturing and encouraging their ideas, in order to achieve lasting commercial success. So far, Ki has kept the identity of its portfolio companies close to its chest.

With a focus on seed and series A investments, Merian Ventures backs female-founded technology companies, operating in cyber, blockchain, AI, machine learning and consumer-facing technologies. It is not clear how much the fund has under management. Led by founder and Managing Partner Alexsis de Raadt St James, Merian Ventures hopes to help rebalance the distribution of capital with a more gender-conscious approach to investment. 

Research shows that male and female founders have traditionally been treated differently throughout the fundraising process. Research from the Harvard Business Review, for example, found that venture capitalists (both men and women) posed different types of questions to male and female entrepreneurs. These unintentional biases can influence the decision-making process and affect the outcome of who receives funding and on what terms. 

The fund invests across the UK, Europe and the US, and has backed a handful of companies so far. Provenance, a London-based company that develops blockchain technology for businesses to track items through supply chains, is the only portfolio company based in the UK.

A relatively new fund, Salonica Maroon was set up in the summer of 2021, and currently has £75m under management. With a specific focus on ethnically diverse and female-led businesses, Salonica Maroon also looks for start-ups with growth potential, proof of revenue and a sustainability focus. 

Each pitch deck considered by the team will face scrutiny from both the Investment Committee and the Sustainability Committee, and will need to pass both committees in order to proceed. The fund provides long-term capital to its portfolio of high-growth companies, with an equal emphasis on financial returns and non-financial impact.

Simsan Ventures‘ mission is to find and invest in the best diverse entrepreneurs at pre-seed to series A rounds, supporting them to create world-class businesses. It specifically seeks to invest in early-stage technology companies with diversity at their core, and a focus on fintech or deep tech. 

On top of this, the fund looks for companies that are seeking to transform society, with humanitarian objectives, and that have strong growth potential. It’s unclear if Simsan has a geographic restriction to investments. Its current UK portfolio includes Beyond Bamboo, an online marketplace for suppliers and merchants of sustainable products; and hotel booking app Porter.

As Europe’s first VC firm for female founders, Voulez Capital seeks to back outstanding female founders building scalable businesses and creating real value. The fund invests in companies with a product or service which is ready (or nearly ready) for market, and is particularly interested in those that improve the lives of women, working parents, children and families. 

The female-founded venture fund was launched by Anya Navidski in 2018. Voulez typically invests between €500,000 (£416,000) and €2.5m across energy, technology, manufacturing and engineering, product design, healthcare and education sectors. 

Voulez has a small portfolio, which includes 9plus1, a rental service for a range of maternal and baby clothing.

It’s not just VC funds and angel networks that are looking to nurture companies founded by under-represented groups. There are also a number of accelerator programmes, such as Sia and Libra, which are opening doors to women and minorities in the hope of making a positive social impact, as well as significant financial returns. 

Find out more on the resources available for under-represented founders.

This article first appeared on Beauhurst’s data platform: Discover, track and understand high-growth companies.