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EISA Welcomes Government Reversal of Angel Investment Rules, boosting investment for entrepreneurs

by | Mar 7, 2024

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The Enterprise Investment Scheme Association (EISA), the official trade body for the Enterprise Investment Scheme (EIS), welcomes the reversal of the January changes to the definition of High Net Worth and Sophisticated Investors in the Chancellor’s Spring Budget 2024. The move sends an important message to entrepreneurs and early-stage investors.

On 31st January, the Treasury raised thresholds for High Net Worth and Sophisticated Investor exemptions under the Financial Promotion Order. These changes raised the income threshold used to define high net-worth individuals from £100k to £170k and removed key criteria used to qualify as a Sophisticated Investor. In doing so, the Government significantly reduced the pool of those able to invest in early-stage startups and this particularly hit women investors, other underrepresented angels and those based outside of London and the South East.

Today’s U-turn signifies a renewed commitment from the government to support early-stage businesses and foster innovation. This is seen as a positive step towards the continued growth of angel investors, including women, across the UK alongside the British Business Bank’s regional angels programme which works to close the regional equity gap.

 
 

Thousands of people across the ecosystem warned that the January changes would result in constrained funding for startups. Particularly at risk were women and minority investors, with potential adverse effects on investment in the regions. The changes risked damage to the UK’s startup ecosystem and its status as a growth engine for the economy as a whole.

As part of the campaign, led by the Startup Coalition, EISA co-signed the Angel’s Letter – an open plea to the government available for viewing at https://www.angels-letter.com/. Other key signatories included the UKBAA, Alma Angel’s Network, Extend Ventures, The Entrepreneurs Network, Enterprise Alumni, Angel Academe, and the Angel Investing School. In addition, more than 2,900 individuals, including many EISA members, also signed the letter.

Without a reversal of the rules brought into place on January 31st 2024, there would have been an estimated 70% fall throughout the UK in the number of women able to invest in startups, claimed Caroline Nokes, chair of the Women and Equalities Committee.

 
 

The EISA’s Director General Christiana Stewart-Lockhart, expressed her enthusiasm for the reversal, stating, “We warmly welcome the government’s decision to reverse the January changes. We’re grateful to the Government for listening so attentively to our concerns and for taking quick action. This is an important step to allow the continued growth in the number of angel investors across the UK able to support innovative startups.”

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