UK reverses thresholds for promos to angel investors after backlash

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The government has reversed its decision to raise the income and asset thresholds for promotions of potentially risky investments to high-net worth individuals after a backlash from investors and technology companies.

The Treasury on Wednesday announced in its Budget statement that it would legislate to reinstate previous eligibility criteria that had been tightened earlier this year.

Executives, tech groups and start-up investors had campaigned against the decision to increase the thresholds for those exempted from restrictions on financial promotions, saying it would block vital investment and disproportionately affect women and ethnic minority groups.

The thresholds will return to £100,000 for income and £250,000 for net assets, after they had been raised on January 31 to £170,000 and £430,000, respectively.

The government also said it would ensure that recent investors in unlisted companies could be certified as “sophisticated”, denoting a person who is sufficiently knowledgeable to undertake a particular investment.

Businesses typically require a firm authorised by the Financial Conduct Authority to approve financial advertising but can be exempt if the promotions are targeted at “high-net worth” or “sophisticated” investors.

Emma Sinclair, the chief executive of EnterpriseAlumni, which provides corporate alumni software and services, said the announcement showed that the government “listens and reacts”.

Sinclair, who had been campaigning for the reversal, said angel investors were “extremely important” and there were “very limited pools of capital for women”. She added that the original changes were “a terrible way to make people who might be thinking about investing not invest”.

Sarah Turner, chief executive and co-founder of Angel Academe, a network supporting female investors, welcomed the move but said she would like to see the government go further.

Turner called for a “whole new approach that is more based on people’s ability to assess risk” rather than an “arbitrary” wealth threshold.

An open letter to the chancellor ahead of the Budget, organised by the Startup Coalition, a group representing tech businesses, said the start-up ecosystem would be “hit hard” and the tighter rules would “squeeze out more women and ethnic minority angels”.

The letter added that the increase in requirements had come at a “delicate time” with the number of first-round seed-stage deals in 2023 at a 10-year low of 1,025.