Chancellor under pressure to rethink angel investor thresholds

Government’s plan to raise income threshold criticised

UK Chancellor Jeremy Hunt is facing calls to reconsider changes to angel investor thresholds amid concerns that the policy shift will disproportionately impact female and underrepresented founders.

The government's plan to raise the income threshold for defining high-net-worth individuals from £100,000 to £170,000 has triggered criticism from various groups, including the Startup Coalition and the UK Business Angels Association.

The proposed changes, set to take effect from 31st January, are aimed at updating investor protection regulations, which have not been revised since 2005. The move is a response to the increasing use of retail investment platforms and aims to align with the current economic, social and technological landscape.

In an open letter representatives from the tech ecosystem, including the Entrepreneurs Network, shared concerns that the alterations would harm the start-up ecosystem at a crucial time. They argued that the rule change would not only reduce the available capital for start-ups, but also have a disproportionate impact on women and underrepresented groups in the investment community.

The letter highlighted the risk of angel investing becoming an activity exclusive to elites, undoing the progress made in democratising the start-up ecosystem through approaches like crowdfunding and angel syndicates. The tech representatives emphasised the importance of maintaining diversity and openness in investing.

Speaking exclusively to Computing, Sarah Turner, CEO & co-founder of Angel Acadame, said, "This sends a terrible signal to the angel investing world and at just the point when we've achieved great strides to diversify away from the image of angels as male, exited tech entrepreneurs or finance people! Many of the financially savvy & risk aware women in our network no longer qualify under the new High Net Worth definition."

Entrepreneur Grace Beverly drew attention to the potential exclusion of women from angel investment opportunities, emphasising the broader issue of unequal access to capital. Kristina Pereckaite, managing director at South East Angels, echoed these concerns, pointing out that the rule change does not address the underlying problem of gender-based financial disparities.

The story highlights the contradiction between the government's objectives of fostering a thriving tech ecosystem and the potential negative impact of the proposed policy on start-up funding - particularly for women-led ventures.