Access to Venture Capital

The Cornerstone Report

What is the Cornerstone Report?

This research was commissioned in May 2020 by Cornerstone Partners, an angel investment network focused on investing in businesses run by black and diverse founder-led teams. A syndicate of individuals of African and Caribbean heritages, Cornerstone came to this work with first-hand experience of businesses that showed great potential for success, but struggled to secure venture capital.
Access to Venture Capital was delivered and supported by inclusion and research specialist consultancy Engage Inclusivity, with support from UK venture industry nonprofit Diversity VC and data sponsorship from company intelligence provider Beauhurst. Looking at the UK environment in particular, it presents findings from an investigation of how founder experiences in seeking and raising equity investment vary in relation to founder backgrounds and founding team composition.

Founder journeys and the barriers to inclusive investment

Key Findings

Underrepresented founders are being excluded from the opportunities of equity investment at a very early stage of business development
Black founders are particularly underrepresented in pre-VC and VC funded cohorts
Black and racially minoritised women and nonbinary founders are the worst represented
Three-quarters of founders come from advantaged socioeconomic backgrounds and hardly any founders come from families living on welfare entitlements
The majority of all founders are graduates from prestigious universities and VC funding is more likely to go to founders who have been to the most exclusive universities

Key Recommendations

Equity investment professionals must recognise the tacit use of networks for risk mitigation, and develop new processes to replace these exclusionary practices

Create funding schemes that support and amplify the work of angel groups, accelerators, and diverse managers that invest in businesses led by minoritised founders

Encourage an “Open VC” model which sees equity providers work with the BVCA, UKBAA and other relevant trade bodies to create guides that abolish exclusionary practices and enable businesses with less social capital to gain access to investment networks

Introduce and support early career development programmes that increase the exposure of venture capital to diverse audiences

Further research is needed at the beginning of the funding journey (i.e. prior to pre-VC stage) to understand where founders from underrepresented groups face challenges in raising initial investment

Further research is needed into the disparities within broad ethnic groups

Further research is needed on the experiences of non-binary and gender-nonconforming founders


Cornerstone Report

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