Columnist

Breaking down the barriers to investment: How you can diversify and grow your investment opportunities

Diversity remains a big issue when it comes to venture capital investment. 

According to British Business Bank, all-female teams had just 2% total equity investment in 2022. Similarly, all-Ethnic Minority teams receive less than 2% of UK venture capital investment.  This is while 43% of seed stage funding goes to graduates from 'elite' universities (Alone together: Entrepreneurship and diversity in the UK report 2020)

This lack of diversity in investment presents a key issue for the future. Without funding diversity, underrepresented founders struggle to access finance, new investors don’t feel recognised in the funding sector and the economy looses out on the opportunity to innovate and grow. There is still a vast amount of work needed to help improve access to finance for underrepresented groups.

At Innovation SuperNetwork, our Access to Finance support looks to tackle these barriers to funding and create inclusive investment opportunities. We spoke to Charlotte Scott, Senior Investor Relations Manager at Innovation SuperNetwork, about how we can improve the relationship between investors and businesses to take on these challenges.

Be Authentic 

Transparency and authenticity are often missing when it comes to building long lasting investor business relationships. There is a misconception that investors loom in the upper echelons of society unlike everyone else. However, human stories will engage them, and authentic connections can be the basis of a very trusting and productive relationship.  

An investor will likely take a board seat in your business, so if you haven’t taken the time to build that trusting relationship where you can disclose key information, then they can't help you make decisions and offer advice that could potentially save your company. 

Take the time to just get out there, network with investors and invest time nurturing those relationships. Treat them as humans and respect their time and opinions as you would anyone else. You’ve got to be able to have good communication and good interpersonal relationships.

Support a diverse and equal range of businesses 

It’s generally acknowledged that we want to hang out with people who have similar interests. But if an investor is committed to diversity and inclusion then they should be branching out, involving themselves with communities who are not from the same background as them.

It’s important, as both an investor and a business, to do a bit of self-reflection. If we’re considering a women-led enterprise for support or investment; reflect and think ‘when I sit and listen to a female founder, what am I projecting here?’ Unconscious bias is a very real problem.

Broaden your investment horizons

One of the key ways to start those crucial investment conversations is to get yourself out there. If an investor needs to go to areas and break into communities who don’t look and sound like them, you’ve got to try and do the same. They genuinely might not know where to find you. 

For example, put an event every week in your diary where you think investors or people who know them might be and show up. It doesn’t just have to be in a formal environment, it could be at a networking event for tech developers with beer and pizza. You might run into an investor who was a former tech developer, or a tech founder who has already fundraised and knows investors who might be interested in your company. 

Pathways to Funding

Open to businesses and socially trading enterprises operating across Newcastle, Northumberland and North Tyneside, Pathways to Funding North of Tyne is here to help you secure the funding you need. With funding from North of Tyne Combined Authority’s Investment Fund, Innovation SuperNetwork, in partnership with North East Enterprise Agency, & North East Growth Hub is improving how regional businesses can secure investment. This is done through specialist investor readiness support and by building a comprehensive Investor Hub for the North.

Find out more about our available support

This was posted in Bdaily's Members' News section by Innovation Super Network .