On 24 July 2023, the Treasury Committee published a report into the UK venture capital industry criticising "unacceptable diversity statistics" and calling for "rapid change from Government and the industry".
The report found that all-female founder teams received just two per cent of all venture capital funding in 2021 with even less received by black and ethnic minority-led businesses.
The Treasury Committee also highlighted the difficulty in receiving venture capital investment throughout most of the UK regions and nations outside of London and the South East, with only twenty per cent of funding received by businesses outside of the “Golden Triangle” of London, Oxford and Cambridge.
The report also reiterated prior Treasury Committee requests for the Government to confirm details of the extension of the statutory sunset clauses on Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) which will otherwise cause them to expire in 2025, noting the Government has previously signalled an intention to do so but is yet to provide details of implementation. Additionally, the Treasury Committee recommended the Government consult on higher funding limits on such schemes.
The Government has two months to respond to the report, with their response due by 24 September 2023.
In the twenty-first century, it shouldn’t come as a surprise to investors that women and those from ethnic minority backgrounds can start successful businesses. Given public funds play a key role in the success of the UK’s venture capital sector, more must be done.