For many social entrepreneurs, raising capital is not just difficult, it is actively misaligned with the businesses they are trying to build. The funding options available often demand either stability that early stage ventures do not yet have, or hypergrowth that undermines long term impact.
Jem Stein has lived both sides of that tension.
Jem is the founder of Daring Capital, an early stage investment firm focused on backing underestimated founders building impact driven businesses.
Before launching Daring Capital, Jem was the founder and CEO of The Bike Project, an organization that provides refurbished bicycles to refugees across England.
Under Jem’s leadership, The Bike Project scaled to £2.5 million in annual recurring revenue and became one of the UK’s most respected social enterprises, earning multiple awards including Social Entrepreneur of the Year and the EU Social Innovation Prize.
Along the way, Jem raised social investment as a founder and now sits on the social investment committees of two large charitable trusts.
Daring Capital emerged from that experience, not as a theory about what founders need, but as a response to what Jem saw failing in practice.
This conversation explores what is broken in early stage impact funding, who is being left out, and what meaningful change would actually require.
What problem did you see in the early stage funding landscape that pushed you to launch Daring Capital, and why did you know it needed to be fixed now rather than later?
I started Daring Capital because social entrepreneurs and the impact they were trying to create were being poorly served by the investment options available to them.
Before Daring Capital, there were broadly two dominant paradigms in social investment.
Debt funds and impact venture capital.
They looked different on the surface, but they shared a core flaw.
Neither actually worked for early stage founders.
Debt funds typically offer high interest loans tied to specific projects like property or short term cash flow for public sector contracts.
That model only works when a business is already stable and highly predictable. It does not work for early stage founders, it does not work for innovative social businesses, and it does not support growth.
Impact venture capital is the second paradigm.
In practice, it is traditional venture capital with an impact label applied to it.
It relies on the power law, where one or two companies return ten or twenty times the fund. That requires extraordinary growth and a fast exit, usually within five to seven years.
There are a small number of sectors where this can work, such as climate technology or health technology. But for most impact business models, it simply does not fit.
It also forces founders to prioritize growth at all costs, regardless of whether that aligns with their impact mission.
I saw founders bending themselves into shapes their businesses were never meant to take, just to fit capital.
That is a problem that needed fixing now, not later, because every year that passes locks more founders into models that undermine both sustainability and impact.
You built The Bike Project from the ground up and scaled it to meaningful revenue and impact. How did that experience shape the way you evaluate founders today?
Building The Bike Project taught me that commitment to the cause matters more than almost anything else.
This is a long game.
Most social entrepreneurs will be working on the same problem for five, eight, ten, or even twelve years. That level of persistence only exists when the cause genuinely matters to you.
It cannot just be a job.
It cannot just be a desire to start any business.
There needs to be a personal connection that keeps you going when things are difficult, which they inevitably are.
It also taught me the value of focus.
At The Bike Project, I tried to do too many things at once.
Looking back, that slowed us down. Today, we look for founders who are deeply focused on one clear problem. That focus is essential, especially when founders are not raising large amounts of capital, which is true for most of the people we back.
Focus makes execution possible.
Without it, even the best intentions struggle to turn into durable businesses.
Daring Capital has already raised more than £2.5 million for underrepresented founders. What types of businesses and founder profiles tend to be consistently overlooked by traditional investors?
Female founders face structural barriers that go far beyond unconscious bias.
These include sexual harassment during fundraising, inappropriate comments, and quid pro quo behavior that would not be tolerated in any professional environment.
This is not anecdotal.
The real issue is that the industry has failed to properly measure and confront the scale of the problem.
Beyond gender, we consistently see founders from diverse ethnic backgrounds struggling to raise capital despite strong fundamentals.
Founders without elite university networks.
Founders building businesses outside London.
Founders over the age of forty.
The pattern is clear.
If you do not look like the last generation of venture backed success stories, you are treated as higher risk, regardless of evidence.
What traditional investors miss is that lived experience is often the real advantage. A founder who has navigated the benefits system understands financial tools for low income users in ways no market report can replicate.
A founder from an immigrant community understands cultural business dynamics that desk research never captures.
Pattern matching keeps money flowing to the same types of founders, solving the same problems for the same privileged groups, while large and meaningful markets remain ignored.
You run a transparent and open application process. What do you look for in the first five minutes of reviewing a founder or startup that tells you they are worth backing?
Three things. Clarity, evidence, and resourcefulness.
First, clarity.
Can the founder articulate the problem they are solving in a single sentence?
Do they understand why existing solutions fail their customers?
If they do, it tells me they have done the work to understand the market, not just the pitch.
Second, evidence.
We invest very early, sometimes pre revenue and occasionally pre product.
That does not mean we do not expect validation.
Evidence can be paying customers, but it can also be surveys, pilots, or early user engagement.
Today, it is possible to test assumptions cheaply and quickly.
The strongest founders do this before they raise capital.
Third, resourcefulness.
The best founders find ways to move forward without permission. They borrow equipment, barter services, and lean on personal networks.
They prove they can execute before institutional capital enters the picture.
We are transparent because the warm introduction model reinforces inequality. The most capable founders are not always the most connected.
Often, they are the ones who have already built something from nothing.
Looking ahead, what do you believe needs to change in the UK funding ecosystem for underestimated founders to compete on fair terms and build durable companies?
It starts with investors confronting their own biases.
Pattern matching to previous successes simply reproduces the same demographic outcomes. If every founder you back looks the same, you are not finding the best opportunities.
You are finding the most familiar ones.
Transparency is essential. Opacity protects discrimination. Founders deserve to know why they were passed over and what criteria informed that decision.
When decisions are made behind closed doors with no accountability, bias thrives.
We also need more investors who have actually built businesses, particularly in underserved markets.
Operators recognize potential that pure financiers miss because they understand what it takes to build without advantages.
Operational experience matters more than pedigree.
Finally, unacceptable behavior must be addressed directly.
Sexual harassment in fundraising is not a cultural issue to be gently corrected over time. It is professional misconduct that should carry immediate consequences.
Until founders from all backgrounds can raise capital safely and fairly, the UK ecosystem will continue to underperform.
We are not lacking talent.
We are funding a rigged system, and pretending it is meritocratic.
