Petition launched over new Angel investment rules: changes could disproportionately hit FemTech sector
From 31 January an estimated 69% of female potential investors will be unable to invest. A petition and open letter is attempting to reverse the decision.
Female founders and investors have launched a campaign to get the Government to reverse a decision over proposed new investment rules.
The rules, set to come into place this Wednesday 31 January, will disproportionately impact both female angel investors and female founders.
You’ll need to earn £170,000 to be classified as high net worth and therefore be eligible to be an angel investor under the Financial Promotions Act. Or you’ll need to have non-pension, non-home related wealth of £430,000.
This is up from £100,000 and £250,000 respectively and will mean an estimated 69% of potential female investors will no longer be able to invest in the same way.
In some areas of the country there may be zero women considered high net worth individuals based on earnings.
For FemTech founders - where funding might typically come from female investors who understand their solutions - this may be a disproportionate hit to the chances of finding a suitable angel investor and accessing capital.
As an example, Founder Martha Silcott, CEO of FabLittleBag, wrote on LinkedIn:
“Fewer women investing means fewer women funded and fewer businesses succeeding; employing people, paying taxes, contributing to the economy. It disproportionately negatively impacts women in an environment already completely skewed against female founders.”
Open letter to Chancellor and a petition for change
In a co-signed open letter to the Chancellor, campaigners have explained the potential impact to the diversity of investments and investors.
The letter says:
“The changes would mark a huge increase in wealth requirements needed to invest in startups, damaging the ecosystem at such a delicate time.
[The changes are] anaethema to the trailblazing startup ecosystem that has been built today.”
The letter also argues that:
Since the changes were first mooted (in 2021), the investment market has changed.
The startup ecosystem will be hit hard.
Female and underrepresented founders will be hit hardest.
Angel investing risks becoming an elite-only activity, undoing huge amounts of good work to address this gap.
A petition has also been set-up to ask for a halt to the proposed changes to angel investment thresholds.
Why is the Government increasing the threshold for angel investment?
The Government originally carried out a consultation in late 2021 to early 2022 to seek views on its proposals. It then published the responses and its plans in November 2023.
One of the key reasons for the review was that the policy had not been reviewed since 2005.
Bloomberg has since reported that UK Minister Bim Afolami will be meeting with campaigners this week (w/c 29 January).