The UK’s angel investment rules are changing

The UK Treasury has been urged to reverse an upcoming rule change that would see fewer women able to angel invest in startups.

What’s the story?
From 31 January, the income threshold needed to qualify as a “high net worth individual” is set to increase from £100,000 to £170,000. This will result in fewer individuals qualifying as angel investors (in other words, those who provide initial seed money for startups) - and impact women the hardest.

How, exactly?
The rule change will result in a “huge reduction” in the number of women able to invest in startups on the basis of income, said Sifted EU.

According to estimates, the number of women meeting these new income thresholds is just 72,500 in England (compared with 291,000 men), only 500 in Wales and zero in Northern Ireland.

Why does it matter?
Writing on LinkedIn, founder and investor Becky Lodge acknowledged that the rule change may seem “like a top 1% issue”, but emphasised that it is also “excluding more women and minorities from being actively involved in angel investing”.

This is problematic because only 2% of venture capital funding (investment which tends to come from banks and other institutions) goes to female founders, who therefore have to rely heavily on angel investment. Moreover, as AllBright co-founder Anna Jones noted, “female angels often back women [founders]”.

What’s being done about it?
Over 500 firms and investors have now signed an open letter urging Chancellor Jeremy Hunt to backtrack over the planned rule change on the grounds that “female and underrepresented founders will be hit hardest”.

A public petition has also been launched to lobby the UK government on the issue - you can sign it here.