Recent investigations into U.K. venture capital (VC) investments over the last ten years, categorized by race, gender, and educational history, reveal concerning trends – with teams comprised entirely of individuals from ethnic minorities and female entrepreneurs securing only a small percentage of available funding compared to all-white teams and male founders.

The research indicates that inherent biases are present throughout all stages of the funding process.

According to a report from Extend Ventures, a not-for-profit community interest company, analysis of U.K. VC investments between 2009 and 2019 encompassed data on 3,784 entrepreneurs who established 2,002 companies. The study determined that all-ethnic teams received, on average, only 1.7% of venture capital investments at the seed, early, and late stages during this decade.

Currently, the U.K.’s Black and multi-ethnic communities represent 14% of the nation’s population.

The report states, “While entrepreneurs from all ethnic backgrounds are underrepresented in funding, Black entrepreneurs experience the most unfavorable results.” It found that only 38 Black entrepreneurs received VC funding over the ten-year period, collectively receiving just 0.24% of the total investment.

Extend Ventures utilized machine learning and computer vision technologies to assess demographic characteristics – “including the age, perceived gender, ethnicity, and educational background of founding members.” The categorization of founders for the research was based on an assessment of ethnicity or gender derived from publicly available images of entrepreneurs.

They explain, “Although ethnicity is typically a self-identified categorization, we believe this approach is justified because the collected data is subsequently anonymized and used to enhance access to capital.” They further note, “Prejudice based on ethnicity or gender is dependent on the perception of those controlling the funds.”

The research also highlights the significant difficulties U.K. female entrepreneurs encounter in obtaining VC funding when compared to their male counterparts.

The report revealed that a substantial majority (68.33%) of the capital raised across seed, early, and late VC funding stages was allocated to all-male teams; 28.80% went to mixed-gender teams; and only 2.87% to all-female teams. Furthermore, female-led teams secured smaller funding amounts than male-led teams at each funding stage.

The situation is particularly challenging for Black female entrepreneurs in the U.K., who experienced the least favorable outcomes.

“A total of 10 female entrepreneurs of Black appearance received venture capital investment (0.02% of the total amount invested) over the 10-year period, with none receiving late-stage funding to date,” the report indicates.

Additionally, the study found only one early-stage (Series A or B) venture capital investment recorded for a Black female entrepreneur, in contrast to 194 early-stage investments in white female entrepreneurs.

Extend Ventures’ research also examined educational background, emphasizing the influence of elite universities on the allocation of venture capital within the country.

The report found that 42.72% of U.K. VC invested at the seed stage during the period was directed towards founding teams with at least one member from an elite educational institution (defined as Oxford, Cambridge, Harvard, Stanford, and their respective business schools).

The debate surrounding the expansion of access for underrepresented students to the U.K.’s top two universities has been ongoing for years, with limited progress in diversifying the student body at Oxford and Cambridge.

The report demonstrates one consequence of this persistent inequality in access to elite education – as it translates to diminished opportunities, after graduation, for securing VC funding.

The implications for social justice and social mobility are evident.

“The data we are presenting today is stark and presents a challenging picture,” stated Tom Adeyoola, Extend Ventures’ co-founder and technology entrepreneur, to TechCrunch. “Only 0.24% of venture funding over the last 10 years went to (38) Black founders, and 0.02% went to Black female founders. Moreover, 43% of all seed funding was invested in teams with at least one member who attended an elite university.”

The report proposes a series of recommendations, including a call for all venture funds to publicly disclose data on their investments to facilitate tracking and enable ongoing, inclusive reporting on the industry’s diversity performance.

It also suggests that VC firms should undertake further research to identify and establish “potential resilience criteria, independent of race, gender, and education,” which could serve as indicators of success in their filtering processes, helping to prevent biased decisions.

Another recommendation is for the U.K. government to establish an “Investing in Ethnic Founders Code,” modeled after the existing Investing in Women Code.

The report also advocates for government support through the creation of a Diverse Co-Investment Fund – suggested to be set at £1.8 billion (14% of the $13.2 billion annual U.K. VC total) – as a strategy to mitigate risk and enhance the allocation of equity investment into Black, Asian, and ethnic-led venture capital funds.

We have contacted the Treasury for a response to these recommendations.

“There is no longer any justification for a lack of transparency and action to address these clear biases,” Adeyoola said. “You can’t improve what you don’t measure, and despite the discussions surrounding the Rose Review [U.K. Treasury-commissioned report into female entrepreneurship] and Black Lives Matter, action must translate into genuine investment in diverse founders to ensure that, as a nation, we are maximizing the potential of our diverse talent and resources.”

“The British Business Bank report released last week already demonstrated that there is no shortage of ambition – only, as we now reveal, a clear lack of financial capital,” he added.

Check Warner, partner at Ada Ventures and also co-founder and CEO of Diversity VC, which supported the report, told us: “It’s extremely overdue to have this data, just as it was overdue to obtain data on the gender split of management teams in VC fund pipelines and who received investment, a report that Diversity VC co-published with the British Business Bank last year, in February 2019.”

“The statistics are deeply concerning. I would urge any Venture Capital fund committed to meaningful change to explore the Diversity VC Standard in order to implement the infrastructure needed to create inclusive pipelines, more diverse teams, and support their portfolio companies in prioritizing and fostering diverse talent.”

Tweeting in support of the report, former “Dragons’ Den” investor and Black businessman Piers Linney wrote: “We are forgoing tens of billions that would benefit the wealth of every citizen. We now have irrefutable and disheartening data demonstrating that something is fundamentally wrong. Silently archiving these reports is unacceptable.”

Tech Nation, a U.K. founder network organization credited with supporting the research, responded to our request for comment: “The Extend VC report highlights that only 12% of funding went to female founders, which is why Tech Nation is proactively collaborating with Playfair Capital to provide office hours for female founders with leading VCs on November 5 and 12.”

“Today’s report also showed that 91.5% of seed-stage funding went to white founders compared to 1.1% to Black founders, so Tech Nation has also partnered with 10×10 VC and Founders Factory to host Black founder office hours on November 26,” CEO Gerard Grech said, adding that the organization “will continue to support research aimed at increasing inclusivity in tech and support I&D programs and interventions that will make a real and positive difference”.

Eileen Burbidge, partner at Passion Capital – a female VC who was named on the Financial Times’ list of the U.K.’s top 100 Black and ethnic minority leaders in 2018 – also welcomed the research when contacted.

“It’s excellent to see this data available, and I’m grateful to Extend Ventures, Impact X Capital Partners, and Tech Nation for taking the time to collect and analyze it,” she told TechCrunch.

“Sadly, I’m not surprised by the findings, and at Passion, given that one of the founding partners is from an ethnic minority group, we’ve always strived to be as inclusive as possible. However, you can’t address what isn’t measured, so this is a fantastic first step.”

“I’m pleased this report will broaden and further develop the conversation about how to make venture capital more accessible to all… across all educational backgrounds, social classes, and ethnic & gender groups,” Burbidge added, stating her support for all the recommendations – “especially those that can have immediate action/impact” – and expressing her willingness to participate in discussions aimed at making progress.

(Notably, one of Passion Capital’s portfolio companies – the insurtech startup Marshmallow, led by two Black twin co-founders, Oliver and Alexander Kent-Braham – recently announced a $30 million fund raise at a $310 million valuation for a product focused on serving underserved segments of society.)

This report was updated with additional comment.