This article is an excerpt from the Deliverable D4.2 Policy Recommendations on Inclusivity in Investment created by Impulse4Women for the FINE Project. For the entire deliverable text, please find it in the Resources area of the website.
Diversity among venture capital and business angel investors is not only a social imperative – it is also a strategic asset. Investor teams that include individuals from varied gender, age, and ethnic backgrounds consistently demonstrate stronger performance outcomes than homogenous groups.
Diverse teams are more likely to identify unconventional opportunities, challenge internal biases, and assess risk more holistically. Research by the International Finance Corporation has found that gender-balanced investment teams generate up to 20% higher returns compared to male-only teams, driven by more robust decision-making and greater openness to diverse founding teams [1].
These advantages extend beyond financial performance. Diversity among investors expands market reach by improving the ability to identify and serve new customer segments. Individuals from underrepresented communities bring unique cultural knowledge, consumer insights, and business networks that enable VC and BA investors to detect unmet demand in niche or underserved markets. For example, ethnic minority and women investors have played a key role in supporting healthtech, edtech, and inclusive fintech ventures that mainstream funds often overlook. As Europe’s demographics become more diverse, the ability to tap into these communities through inclusive capital allocation becomes a competitive differentiator [2].
Greater diversity also enhances innovation. When investment decisions are made by individuals with different lived experiences, groupthink is less likely to occur, and teams are better equipped to interrogate assumptions and consider a wider range of startup models. This improves not only selection outcomes but also the ongoing support provided to portfolio companies. A McKinsey study found that companies backed by diverse investors are more likely to introduce new products and services, engage with underserved users, and outperform their peers on key innovation metrics [3].
There are already visible signs of this impact in European VC and angel networks. In France, Sista and France Digitale have promoted inclusive investment practices that led to a 17% increase in funding for women-led startups between 2019 and 2022 [4]. In the Netherlands, Code-V and the Dutch New Narrative Lab have worked to expand investor education and access for women and racially diverse communities, while Ireland’s NDRC has launched pre-seed accelerator programmes with tailored outreach to young founders and first-time angel investors [5]. Another report by McKinsey showed that ethnic and gender diverse teams are more likely to outperform their less diverse counterparts by a matter of 27 percent [6]. These initiatives demonstrate that intentional policies, networks, and mentorship structures can generate not only equity but stronger economic returns.
If Europe’s innovation ecosystem is to remain globally competitive, expanding the base of who gets to invest must become a policy priority. The economic rationale is clear: diversity is not a liability, but a multiplier of returns, market insight, and startup success.
CASE STUDIES: SUCCESSFUL DIVERSITY INITIATIVES
A number of recent initiatives across Europe have demonstrated that investor diversity can be increased through deliberate policy, targeted funding mechanisms, and inclusive programming. These case studies reveal the measurable impact of institutional action in shifting the demographic composition of venture capital and business angel networks toward greater representation of women, youth, and minority groups.
In France, national coordination around inclusive entrepreneurship has led to strong public-private collaborations. The government-supported Sista Charter, developed in partnership with France Digitale, has been adopted by over 300 VC firms and commits 19 signatories to tracking diversity data, increasing the share of women-led startups in their deal flow, and publishing regular impact metrics. Early outcomes suggest a steady increase in female participation in funding rounds and an expanded conversation around gender bias in startup evaluation [7].
In Ireland, the NDRC accelerator programme – funded by Enterprise Ireland and delivered through Dogpatch Labs – has incorporated diversity-focused outreach into its pre-seed support model. Young founders and first-time angel investors, including those from immigrant backgrounds, are prioritised through targeted mentorship, inclusive selection panels, and access to non-dilutive capital. Data from 2022-2023 shows a measurable increase in female and minority-led teams completing the accelerator and joining early investment rounds [8].
The Netherlands has emerged as a leader in supporting ecosystem-wide inclusion efforts. Organisations like Code-V and the Dutch New Narrative Lab offer national investor education and empowerment programmes for women and ethnically diverse individuals. These initiatives provide training on financial literacy, regulatory navigation, and fund creation, allowing underrepresented groups to enter investment circles from the ground up. In tandem, the Dutch government has supported these efforts through funding partnerships and public recognition, helping to normalise diversity within institutional finance [9].
In 2019, the EIB collaborated with leading Greek banks: Alpha Bank, Eurobank, National Bank of Greece, and Piraeus Bank, to launch a €500 million financing initiative aimed at supporting businesses that promote youth employment and female empowerment [10]. This programme marked the EIB’s first dedicated support for female entrepreneurship and leadership in Greece.
By providing favorable loan terms to companies increasing female participation in the workplace and those creating opportunities for young people, the initiative sought to address gender disparities and high youth unemployment rates in the country. The programme was guaranteed by the Hellenic Republic and aimed to stimulate approximately €1.4 billion in investments across various sectors.
In Malta, the Micro Invest Scheme serves as a notable example of how targeted fiscal incentives can promote inclusive entrepreneurship. Administered by Malta Enterprise, the programme offers tax credits to small and medium-sized enterprises that invest in their business development. Importantly, the scheme includes a higher tax credit cap of €70,000, compared to the standard €50,000, for enterprises that are majority-owned by women, family-run businesses, or those based in Gozo, which traditionally has a more underdeveloped economy. This reflects a national policy effort to encourage female participation in the economy and reduce regional disparities [11]. Since its inception, the scheme has provided substantial financial assistance to businesses. For instance, between January 2019 and August 2021, approximately €84 million was allocated to enterprises through this initiative. In 2021 alone, the scheme received 3,852 applications, leading to an investment of €35 million in that year [12]. While the scheme is commendable for its gender focus, it currently lacks similar mechanisms aimed at supporting youth or minority investors. Expanding eligibility to other underrepresented groups would allow Malta to build on this framework and further diversify its entrepreneurial and investment Ecosystem.
At the pan-European level, the European Investment Fund (EIF) launched the Gender-Smart Equity Investment Programme in 2024. This initiative supports fund managers who adopt inclusive investment practices and prioritise underrepresented founders. Its first round included partnerships with VC firms in Germany and the Netherlands and is already reporting positive shifts in gender balance among decision-makers and funded ventures [13].
Outside Europe, global examples highlight additional best practices. In the United States, the Fearless Fund was created specifically to invest in women of colour, pairing capital with mentorship and community-building [14]. Despite legal challenges, it has created a template for race- and gender-conscious investing that integrates financial inclusion with ecosystem development. Meanwhile, in Singapore, the government’s Startup SG Equity scheme co-invests alongside private investors in female- and youth-led startups, lowering entry risk for angel investors and helping to shift capital toward inclusive ventures 15].
The impact of these initiatives is visible in both quantitative and qualitative terms. Where diversity commitments are formalised and supported by policy, investor ecosystems become more accessible to first-time, younger, and minority participants. Performance studies have consistently found that diverse investor teams contribute to stronger returns, better risk-adjusted decisions, and more inclusive startup portfolios. These case studies suggest that the tools to transform the investment landscape already exists. The question is how widely and consistently they will be applied.
PRIVATE SECTOR AND INSTITUTIONAL STRATEGIES
Private sector actors, particularly venture capital firms and angel investor networks, are critical players in building a more inclusive early-stage investment ecosystem. These institutions control access to funding, shape professional networks, and influence whose ideas are seen as credible and fundable. Their internal policies and external engagement strategies have a direct impact on whether women, young people, and minorities can enter the investment space not just as founders, but as investors and decision-makers. Inclusive hiring practices, transparent investor onboarding, and structured mentorship pathways are essential tools for reshaping participation in European investment.
- VENTURE CAPITAL FIRMS
VC firms have long been shaped by homogenous hiring patterns and informal talent pipelines. Investment roles, particularly at the partner level, remain dominated by white, male professionals, and access to deal flow or fund management experience is rarely extended to individuals outside of existing networks. However, several firms across Europe are adopting inclusive practices to counter this. One widely recognised framework is the Diversity VC Standard, which provides firms with tools to track representation data, implement equitable recruitment protocols, and design inclusive internal cultures [16].
In the UK, Ada Ventures has adopted a diversity-by-design approach, proactively recruiting scouts and analysts from underrepresented backgrounds, including young professionals and ethnic minorities [17]. The firm runs open-access sourcing programmes, removescredential-based gatekeeping in recruitment, and measures the demographic profile of its investment pipeline. Similarly, BackingMinds in Sweden focuses on identifying founders and scouts from undercapitalised communities, using data-driven techniques to uncover overlooked opportunities that more traditional firms may ignore [18].
Inclusive VC strategies also extend beyond recruitment. Firms are developing training tracks for early-career professionals, formalising internal mentorship, and opening up limited partner conversations to diverse fund managers. This process is seen in action in Atomico, a prominent European venture capital firm, which has been proactive in integrating diversity and inclusion into its operational framework. The firm has established internal programs focused on creating a supportive environment for underrepresented groups within the tech industry [19]. Another example is seen with the Polish Private Equity and Venture Capital Association (PSIK), which has established the Social Business Accelerator (SBA) program. SBA is a pro bono initiative where experienced PSIK mentors collaborate with leaders of social purpose organizations.
While primarily aimed at social enterprises, the SBA program exemplifies a structured mentorship approach within the Polish investment community, fostering the development of diverse leadership and inclusive business practices [20]. Additionally, Level 20, a not-for-profit organization based in Spain, is dedicated to improving gender diversity in the private equity and venture capital industry. They have implemented mentoring programs aimed at supporting women currently working in private equity to succeed and progress within their firms [21]. These models help embed equity into the investment process itself, not just in portfolio selection, but in the decision-making bodies responsible for allocating capital.
- ANGEL INVESTMENT NETWORKS
Angel investment networks, which often operate with fewer formal constraints than VC firms, are well-positioned to lead on diversity, yet have historically been even more exclusive. Traditional syndicates are built on wealth, reputation, and private networks, which systematically exclude first-time investors, particularly those who are young, female, or from minority communities. Without direct intervention, angel investing risks replicating the structural exclusions already seen in other financial domains.
In response, some networks have emerged specifically to address this gap. The UK’s Angel Academe focuses on supporting women investors through structured mentorship and co-investment programmes. The network provides legal and financial training, demystifies early-stage investing, and builds peer confidence among participants [22]. Similarly, international networks like Pipeline Angels use a cohort-based model to train and support first-time women and non-binary investors, many of whom are people of colour. Participants learn due diligence, term sheets, and impact investing strategies before joining investment rounds [23].
While Hungary’s startup scene is growing rapidly, diversity remains one of its largest challenges [24]. To combat this, the Hungarian Business Angel Network (HunBAN) is actively promoting inclusive practices within the angel investing community. Established in 2017, HunBAN serves as the official association for angel investors in Hungary, aiming to integrate the country into the international angel investment landscape and represent both companies and investors’ interests. Recognizing the importance of diversity, HunBAN has introduced a Community Membership designed specifically for individuals new to angel investing. This initiative provides a supportive environment where novice investors, including those from underrepresented backgrounds, can learn, connect, and grow at their own pace, guided by experienced mentors. By lowering barriers to entry and offering tailored support, HunBAN is fostering a more inclusive and diverse investor community in Hungary.
European initiatives such as Rising Tide Europe, backed by the European Investment Bank, have also shown the potential of coordinated angel education. By creating temporary learning cohorts and matching participants with experienced lead investors, the programme has increased the number of women and minority individuals entering the space with the tools and confidence to participate actively [25]. Additionally, the European Super Angels Club (ESIL) has been working to empower business angels in Eastern Europe, with a particular focus on mentoring women and young investors. ESIL’s vision is to strengthen gender parity among investors and support investment in diversity.
The growing momentum behind inclusive angel networks shows that when entry points are redesigned with equity in mind, the demographics of investor participation shift meaningfully. With targeted training, peer support, and co-investment structures, underrepresented individuals are more likely to take on investor roles and remain engaged over time.