Why we built a venture capital fund for refugee founders

The Refugee Venture Fund is, to the best of our knowledge, the first equity investment vehicle in the UK to exclusively back founders with experience of forced displacement.

Our aim isn’t to corner a market, but to level the playing field for a founder community that has faced significant barriers to growth capital for too long. A key part of our success will therefore be the capital we can catalyse into this community, both in the UK and further afield.

To do this, we want to be as transparent as possible about our thesis, what we’re learning, and how we’re investing. This blog is our first step.

Refugee entrepreneurs build great companies. We know this from household names like Michael Marks opens in a new tab and Steve Shirley opens in a new tab, and from UK success stories like Sukhpal Singh Ahluwalia opens in a new tab (now one of our founding investors) and Dr Nik Kotecha OBE DL opens in a new tab, who both arrived as refugees from Uganda in the 1970s. We’re lucky enough to see this same potential every day in our work at TERN.

Despite this track record, we think that venture investors largely overlook this community for a variety of reasons (more on this below). We aim to close that gap: a fund which specifically and exclusively backs the UK’s most ambitious refugee founders.

TERN has worked alongside the refugee business community for 10 years, connecting 1,800 entrepreneurs to support so far, and our reach is scaling 30% year on year. We have a track record of helping refugee founders start businesses (300 companies and counting), but too often these companies stall rather than accelerate. Over the last 3 years, our community has consistently said this is down to one primary reason: access to capital.

To contextualise this problem, the average trading TERN founder has raised £12,000 in financing, against an average estimated capital need of £60,000. We have also not tracked a single VC deal into our community over the last decade¹.

Not every business is a venture case. Much of that funding gap would be better filled by loans and grants, which is why TERN set up Skylight opens in a new tab. But we believe a meaningful minority could reach venture scale, and right now almost no one is looking for them.

We consistently see three interlinked problems:

• Networks: most refugee founders start their business with a blank slate of social capital, and 40% of TERN applicants don’t have easy access to personal networks that could help them – not even in an emergency. This creates a “network penalty”: UK business networks are informal, rarely advertised, and hard to enter without an introducer. That matters most at the point of raising, when early-stage investors still rely heavily on warm introductions.
• Legitimacy: the very nature of forced displacement means refugee founders are not migrating because of a work or education opportunity in the UK. This means that any UK educational or professional track record has been rebuilt, not transferred. So despite this being a highly qualified community – 70% hold degree or high-level qualifications, and two-thirds have run a business before – the majority of their experience is in institutions which UK investors don’t recognise.
• Bias: research from the British Business Bank opens in a new tab and Extend Ventures opens in a new tab shows that UK venture funding concentrates on founders who resemble a narrow investor base, often with elite credentials. Immigrant founders surveyed by Blue Lake VC opens in a new tab also list networking and bias against immigrants among their main fundraising hurdles.

As a result, refugee entrepreneurs rarely know how to reach investors - and investors think of refugees as a humanitarian crisis, not an investment thesis.

This is out of step with reality, as it’s estimated that there are 33,000 potential refugee entrepreneurs in the UK, who are already contributing £520 million to our economy opens in a new tab. What’s more, three trends make us believe this potential is growing:

• The number of refugees in the UK has roughly quadrupled opens in a new tab since 2020, largely because of arrivals from Ukraine. More than 150,000 Hong Kongers opens in a new tab have also arrived through the separate BN(O) route².
• These are highly talented business communities who are already building significant business footprints opens in a new tab in the UK.
• This 33,000 estimate also excludes previous generations opens in a new tab of refugee entrepreneurs that are eligible for our fund.

So we are confident that this is a significant founder community, and that the majority of investors are not currently connected to this community. To illustrate the demand created by this disconnect: TERN currently has 700+ founders on its waitlist, and we have had 220 enquiries to the fund in our first two weeks.

In short, the same way any good early-stage investor would, but with a few important adjustments for the refugee context.

The starting point for us will always be the founders themselves. We want to back people we believe to be capable of extraordinary things, and accelerate their potential.

We assess every applicant to our fund against four principles:

• Domain obsession: how deeply they understand the problem they’ll be solving, well beyond a normal read-around level.
• Evidence of exceptionalism: most investors look for this in CVs and credentials, which often don’t survive forced displacement. So instead, we look for a clear upward break from the path most people take after resettlement, whether or not it comes with qualifications that UK investors recognise.
• Bias to action: visible progress on the business in a short space of time. We benchmark this against the rest of our applicant pool, rather than an absolute bar, as many founders are building with far fewer resources and networks than a typical UK start-up.
• Right to win: the skills, access and team that put them in a unique position to solve the problem at scale. For many refugee founders, this includes insight into markets and communities that mainstream founders simply can’t reach.

We’re just as interested in founders who stand out sharply in one or two of these areas as in those who are consistently good across all four. Founders who go on to significantly overachieve often show that kind of “spikiness” early.

Alongside this, we then test the business itself: is there a plausible future buyer; does it have room to reach venture scale; and is there an impact footprint (e.g. through a commitment to hiring from the refugee community or evidenced alignment with the UN Sustainable Development Goals (SDGs) opens in a new tab)? Each of these factors strengthens the investment case, but our assessment of the potential of the founder will always come first.

Success starts with our founders. We’ll ask each of them what they want the capital to unlock, and hold ourselves to that as much as to any investor metric.

Beyond that, we’ll be watching four things:

• Portfolio progress: traction, revenue growth, and above all follow-on rounds at higher valuations, ideally with mainstream investors backing these companies on their commercial merits. This is a commercial vehicle, and we expect to be judged on financial returns over the long term.
• Proof of the thesis: evidence strong enough to show that refugee founders are backable on commercial terms, and to make the case for a larger fund.
• Impact footprint: the number of employees hired from within the refugee community, and how each business aligns with the UN SDGs. As this is a pilot vehicle, we want to understand the impact footprint of investing in this community alongside building the commercial case.
• A wider shift in capital: working alongside TERN and Skylight to close the funding gaps which refugee founders face at every stage, from a first loan to a first equity round.

We’ll also publish what we learn, including what doesn’t work, and share it through the Global Refugee Entrepreneurship Network opens in a new tab. If the pilot only works for the companies we back, it hasn’t done its job.

To date, we’ve raised £300,000 from seven founding investors. Getting here took longer than we planned, and the fund looks quite different from our first design.

When we first designed the fund in summer 2024, we were aiming for £10 million with scope to make 30 ‘talent’ investments and follow on with pre-seed tickets into 12 of these founders. Twelve months in, it was clear we couldn’t secure tickets large enough from key investors in the space to close a fund that size. Many of their challenges were fair:

• We had no portfolio to point to, only indicative case studies.
• They wanted clarity on whether decisions would be impact-first or returns-first.
• They wanted proof behind our returns-modelling assumptions.

So in the summer of 2025, we changed course and focused on building a pilot fund. We reduced our ask, built a more flexible vehicle (an SPV rather than a traditional LP/GP fund), and cut many of the ecosystem extras we’d built into the full fund.

Almost immediately, we landed our first anchor investor. We’ve been raising match funding against that commitment ever since, and the final commitment for our initial close came in July 2026, alongside grant capital to cover operating costs. We’ve been in build mode since.

For those who like to see numbers: over the past two years we’ve spoken to 150+ people, shortlisted 45 of them as warm leads, and ended up with seven investors (so far) in our initial pool.

One unusual part of our approach is that we raised the fund largely alongside TERN’s existing work. That meant we had no dedicated fundraising capacity, full-time or even part-time. But it also meant we weren’t burning cash or racing to cover salaries, so we could afford to be patient without the cashflow deadlines faced by many emerging fund managers.

We are continuing to raise towards a targeted full close of £500,000 until the end of January 2027, although we can invest as much as we can raise!

We’re not alone in this. Over the last few years, real momentum has built behind refugee-lens investing, an approach pioneered by the Refugee Investment Network opens in a new tab, which created the “Refugee Lens Investing” framework for identifying businesses which are owned by, led by, or providing support to refugees.

There’s now a growing group of funds and programmes working on this around the world, including:

• Startups Without Borders opens in a new tab, connecting refugee and migrant founders across the Middle East, North Africa and Europe to training, networks and investors
• Tamveel Climate Ventures opens in a new tab, investing in climate founders from under-represented backgrounds across Europe
• Blue Lake VC opens in a new tab, backing immigrant founders here in the UK
• Zeytoon Ventures opens in a new tab, investing in Palestinian founders globally
• Skylight Ventures opens in a new tab, TERN’s sister-fund providing interest-free loans to refugee entrepreneurs

…and many more building behind the scenes.

The opportunity now is to move from a handful of specialist funds into the mainstream. The field’s own research says that scaling Refugee-Lens Investing will mean building a displacement lens into mainstream funds and development finance strategies. That’s exactly where we hope the pilot can help: by building a track record that larger investors can follow.

Collectively, we want to keep raising the profile of refugee founders and present a united voice to capital allocators around the world: the refugee community deserves investment, not just aid.

Footnotes

1. This, of course, could be as much a monitoring problem as a VC access problem. However, even anecdotally our team is unaware of any equity deals into refugee-led businesses in our community. ↩

2. A quick sidebar: while this is a significant, neglected business community, it’s worth remembering that refugees remain a small share of migration opens in a new tab to the UK. ↩