Caroline Dinenage signs letter calling for angel law change

MP Caroline Dinenage is one if the most recent high-profile signatories who are backing the investHER campaign, which is calling for a change in the law around angel investments.

InvestHER was launched in response to HM Treasury bringing in new rules which make it more difficult for women and other minority groups to qualify as angel investors.

Dinenage announced her support for the campaign, which has issued an open letter calling for chancellor Jeremy Hunt to reverse the changes in the 6 March budget, on her LinkedIn profile.

Organiser of the letter, Emma Wright, partner at Harbottle & Lewis and director of the Institute of artificial intelligence (AI), said: “InvestHER is a movement that has come together to raise the issue of the inequity in the tech, business and finance sectors and how government needs to remove barriers, not compound them.

“As we move into an ever tech and AI-enabled world, we need more differing voices at the table, not less, and these changes to legislation – although seemingly innocuous – will detrimentally impact the diversity of our tech, business and finance ecosystems at a time when we need to do all we can to nurture and encourage any green shoots of recovery in our economy.”

Until now, the rules that make individuals exempt from Financial Conduct Authority (FCA) rules around the communication of financial promotions have allowed angel investments into businesses as long as that individual is of “high net worth”, which until this point has required them to have an income of at least £100,000 over the previous financial year, or net assets of at least £250,000.

Following a consultation, HM Treasury decided to change the criteria for what defines a “high net worth individual” – from 31 January this year, an individual will either need an income of at least £170,000 over the previous financial year, or net assets of at least £430,000.

The concern amongst the tech sector about these changes is the impact this will have on the diversity of angel investors. As pointed out in the investHER letter: “Of the 15.66 million women working in the UK, only 76,500 (0.0048%) would meet the new threshold. The impact for women of colour is especially stark, and it is these diverse angel investors who overwhelmingly fund diverse founders.”

Female-founded businesses already receiving less backing than their male counterparts in all areas of the investment landscape – for example, research from scaleup database Beauhurst in 2018 claimed that 91% of all venture capital investments in the UK are awarded to startups with all-male founding teams.

Diverse investors, whether they venture capitalists or angel investors, are more likely to invest in diverse businesses, and with the government’s new law ruling out a large number of diverse angels, this may be a bump in the road when it comes to increasing tech sector diversity.

Many high-profile women, including a large number on the Computer Weekly list of the Most Influential Women in UK Tech, are among the 650+ signatures calling for change.

BCS recently released statistics stating that it will take another 283 years for the percentage of women working in the UK’s tech sector to match the 48% of women there are in the wider workforce if current trends continue – with setbacks such as this, it is likely to take longer.