From January 31st 2024, the United Kingdom has revised the criteria which determine whether you can certify as an angel investor, also called ‘high net worth individual.’ Under the updated policy, individuals seeking such designation must demonstrate an annual income of at least £170,000 in the preceding financial year or possess net assets amounting to no less than £430,000. The main reason for this change, according to the government, can be attributed to the rise in inflation over the last decade.
Since introducing these criteria, many stakeholders within the angel investing community and wider tech ecosystem have expressed deep concern about this change, which will particularly affect aspiring angel investors. This change represents another barrier to leveling the playing field not just for investors but for founders as well.
This notable increase of 70% in income levels, from £100,000 to £170,000, will have a significant impact on women and underrepresented founders given the statistically disparate distribution of high-income earners. For instance, data from the HMRC indicates that in the previous tax year, nearly 148,000 men in the UK reported earnings surpassing £150,000, whereas only approximately 46,000 women achieved similar income levels. Furthermore, research by angel investors such as HERmesa and Angel Investors shows that certain areas in the UK have no women earning more than £170,000.
Introducing this new criteria will only widen the funding gap since investors are more likely to invest in founders who look, sound and speak like them. Currently, only 2% of VC pounds go to female founders in the UK. Black founders in the UK raised only 0.95% of all venture investment allocated in the country so far this year (or just $165 million out of around $17.3 billion).
How do I become a certified angel investor despite these changes?
Despite these significant changes, it is still possible for you to become an angel investor!
By completing our course and joining the Angel Investing School (AIS) network, you will be eligible to invest in startups in the UK within 6 months! By being part of the AIS network for 6 months, you are classified as a “self-certified” investor and get to invest in start-ups!
So if you are keen to become an angel investor, make sure you register on the waiting list here to not miss your chance to become a certified angel investor!
We have trained 100s of angel investors and our network spans across the whole tech industry!
UPDATED on the 17th of March 2024
Update on the eligibility criteria for angel investing in the UK
In January 2024 the government announced that they would be revising the criteria which determine whether you can be certified as an angel investor, also called ‘high net worth individual.’ Under the updated policy, individuals seeking such designation must demonstrate an annual income of at least £170,000 in the preceding financial year or possess net assets of no less than £430,000. According to the government, the main reason for this change can be attributed to the rise in inflation over the last decade.
This caused a lot of uproar and concern in the tech community. Entrepreneurs like Grace Beverly were very vocal about this change in criteria as this change would disproportionately affect underrepresented investors such as women, members of the LGBT+ community and members of non-white communities. For instance, data from the HMRC indicates that in the previous tax year, nearly 148,000 men in the UK reported earnings surpassing £150,000, whereas only approximately 46,000 women achieved similar income levels. Furthermore, research by angel investors such as HERmesa and Angel Investors shows that certain areas in the UK have no women earning more than £170,000.
The big change
Because of the negative impact this policy would have on the angel investing, startup and entrepreneur ecosystem, members of the AIS community and beyond raised their concerns publicly through different forums. For example, an open letter was sent to the chancellor to outline the negative effects this policy would have.
After months of uproar and following the circulation of the InvestHer open letter, which garnered over 3,000 signatures, the Chancellor finally announced during his Spring Budget the reversal of both the income and net asset thresholds for angel investing. This decision signifies a notable policy shift and underscores the government’s responsiveness to public concerns. The successful outcome of the campaign demonstrates the efficacy of grassroots advocacy efforts in influencing policy decisions and how important communities and organisations like AIS are to ensure diverse representation in policy-making, investing and the wider tech ecosystem to avoid long-lasting negative consequences on the startup and investing world.
So if you are keen to lead the change in angel investing and make the investing world more inclusive, make sure you register on the waiting list here to not miss your chance to become a certified angel investor!
We have trained 100s of angel investors and our network spans across the whole tech industry!