Venture capital industry needs to address diversity failings

Venture capital is a risky but crucial form of investment for innovative companies with high growth potential. The venture capital tax reliefs are globally competitive and a key draw for investors but there are areas of concern according to a report from the House of Commons’ Treasury Committee.

On diversity the evidence presented to the committee showed that businesses with all-female founders received just 2% of all venture capital funding in 2021 while less than 2% went to black and ethnic minority-led businesses. MPs called for the Treasury to make collecting and publishing the diversity statistics of venture capital firms and their investments a requirement for eligibility.

Further despite previous calls from the committee the Treasury has not provided clarity on when reliefs with expiry dates will be extended. For example the enterprise investment scheme and venture capital trusts have statutory...