HomeFundingCornerstone VC announces a €23.9 million fund to back diverse teams in...

Cornerstone VC announces a €23.9 million fund to back diverse teams in the UK

London-based Cornerstone VC has announced the first close of its fund at about €23.9 million. The fund will back entrepreneurs and innovators that are underrepresented and startups led by diverse teams. 

Investment and funding have a diversity problem. There’s no sugarcoating it – the reality is that diverse founders are vastly underrepresented and underfunded across Europe. According to a report by Cornerstone released in 2021, only 1% of founders that receive seed funding identify as black and only 3% of VC-funded founders identify as black. Further, of those that fo receive funding 75% of founders come from privileged or advantaged socioeconomic backgrounds, and hardly any founders come from families living on welfare entitlements. This is the state of the sector – and it’s simply unacceptable. 

There have been efforts to address the situation, to make the VC world more diversity-friendly and to back unrepresented and undervalued founders and innovators. This is what Cornerstone VC want to contribute towards, and they’ve just closed the first round at over €23.9 million to support and grow the cause.

Cornerstone VC – backing diversity 

Founded by Edwin Appiah, Rodney Appiah, Wilfred Fianko in the UK, Cornerstone VC began life as a black-led angel network – Cornerstone Partners. Founded in 2016, Cornerstone backed founders from the black community, such as ByRotation, Passionfruit, Hutch and MoonHub. It’ defined itself as a pioneering grassroots fund, backing founders from underrepresented founders and addressing the unequal societal dynamics at play in VC and business.

Cornerstone VC’s mission is to establish a leading VC firm with a diversity-led investment strategy that unlocks outperformance and delivers returns for investors. Cornerstone VC will target management teams with inherent (such as age, gender or ethnicity) and acquired diversity (social capital) and address the equity funding gap for entrepreneurs that are too often overlooked and underestimated by the wider funding community.  

The fund

This new fund will focus on tech-enabled companies at pre-seed and seed stage, typically investing initial cheques of between £250k and £1 million with capital reserved for follow-up funding. This fund is thinking long-term. 

It plans to invest in up to 40 companies with a significant proportion based outside of London. In an innovative ‘twist’ on the traditional VC model, Cornerstone’s angel network will also receive a share of the fund’s profits via carry participation.

Rodney Appiah, Managing Partner at Cornerstone Partners, explained: “We are on a mission to put teams at the heart of our investment approach, believing diversity is key to driving outperformance. We are looking for businesses that are intentional about team composition, can excel in high growth environments and are truly obsessive about execution. People first, software second.”

“Contrary to perceptions around a pipeline problem, we don’t see any evidence of that. We meet more than 500 diverse founder led businesses a year and our own data indicates that there is a growing pipeline of high growth, innovation led, investment opportunities led by diverse founders, particularly at pre seed and seed stage requiring further institutional investment.”

Who’s investing

BGF, the UK’s most active investor of growth capital and The Hg Foundation, a grant-giving charity with a mission to remove barriers to education & skills in technology, both led the first round close, as well as others including Atomico, one of Europe’s leading VC funds focusing on Series A and beyond. 

Other investors include Nic Humphries and several senior partners from Hg, a leading software and services investor, as well as other individual investors including former BVCA Chair Neil Macdougall, Scott Mackin, Jamie Broderick, Stefan Ericsson and Sidumiso Sibanda.

Stephen Welton, Executive Chair, BGF said: “We are delighted to be backing Rodney, a BGF alumni, and the team at Cornerstone VC in the launch of its ground-breaking seed-stage tech fund, which complements BGF’s established minority investment for small and mid-sized growth businesses. BGF is actively committed to supporting a targeted range of activities where the objective is to make a real and meaningful difference to broader representation in the investment and entrepreneurial communities. We are very encouraged that the work we have done supporting female entrepreneurs has resulted in us being the most active investor in women-led scaleups in the country.”

Nic Humphries, Senior Partner and Executive Chairman at Hg, added: “Hg has over 20 years’ experience in partnering with and rapidly growing innovative software businesses. This experience has demonstrated that diversity in leadership often leads to better investment and business decisions. Diversity in the technology sector continues to be a priority for us, the businesses we invest in and is also at the heart of The Hg Foundation. As such my colleagues and I are delighted to support the Cornerstone team and we look forward to working together.”

The team

Founder Rodney has served as a committee member for Lloyds Banking Group’s Black Business Advisory Committee, Innovate UK’s Credit Committee and the London Chamber of Commerce and Industry’s Black Business Association. He previously chaired the CBI’s London Under 35 Committee.

Edwin currently serves as an IC member of Imperial College’s Enterprise Fund and was a former International Banker at Coutts, advising more than 100 owner manager businesses across US and Europe. 

Wilfred currently serves as a board observer at a leading LSE Listed Private Equity firm in the UK and was formerly a senior management consultant at UBS and KPMG, specialising in financial services transformation.

- Advertisement -
Patricia Allen
Patricia Allen
is the Head of Content at EU-Startups. With a background in politics, Patricia has a real passion for how shared ideas across communities and cultures can bring new initiatives and innovations for the future. She spends her time bringing you the latest news and updates of startups across Europe, and curating our social media.

Most Popular