The 2024 Glass Ceiling: Funding Barriers for Women

🗞️ 6th March 2024: Glass ceiling for angel investors overturned

The government has made a U-turn on this ruling, which was poised to shut out a majority of female investors and potentially damage the investment landscape.

After more than four weeks of uncertainty, the government has finally listened to its detractors, with the changes to income requirements for high net worth individuals reversed in the 2024 Spring Budget.

Today, new legislation will significantly raise the bar for women looking to step into the world of angel investing.

Until recently, investors on angel platforms needed to earn over £100k. But, from today this threshold soars to £170k. The steep increase will disproportionately impact the pool of female investors in the UK, particularly in regions where women earning over £170k are scarce or non-existent.

Fewer female investors could lead to diminished investment in female-led companies. This in turn translates to fewer opportunities for women in business, an even wider gender funding gap that will continue to set the UK back, and led to an overall reduced flow of financial resources into the hands of women.

The battle for equality persists

While things should be getting easier and fairer in terms of equality, recent news has proven that this is not the case – and artificial intelligence is contributing to the issue rather than helping to resolve it. Just this week, it was also noted that:

79% of working women are employed in the occupations deemed most susceptible to AI automation. (UK Parliament of Science and Technology)
Women make up half of the UK population, yet only 22% of AI and data professionals are presently females (Alan Turing Institute)
Men also currently constitute an average of 80% of AI professors (Alan Turing Institute)
Women earn an average of 77p for every £1 a man earns, and it will take an estimated 130 years to close the global gender gap at the current rate of progress. (World Economic Forum)
Black British and Asian employees earned less (£13.53) median gross hourly pay than White employees (£14.35), which has been consistent since 2012. (Office of National Statistics)

The ‘sophisticated investor’ label

Despite reservations voiced even in the government report about the legislation, which noted, “a large majority of respondents strongly disagreed with the proposal”, the government has chosen to proceed with the change anyway.

In the report, individuals with earnings exceeding £170k will be officially considered as ‘sophisticated’ investors. Plenty of men and women alike may consider this an archaic and potentially offensive classification that invalidates anyone below the limit.

The terminology raises concerns about the perpetuation of class and gender divides within the investment arena, despite such milestones as women-led companies outperforming men’s in the Fortune 1000 top companies in 2023. Whether intentional or not, categorisation in this manner points to an exclusionary and outdated system.

The call for reassessment

Reactions to the changes have been scathing.

Roie Samuels, angel investor and CEO at Connectd, has noted on LinkedIn that the new regulations will effectively mean there are no “sophisticated” female investors at all in areas such as the North East of England, or in Northern Ireland. He notes:

“Angel investing [now] risks becoming an ‘elite-only’ activity.”

Obu, a platform for women venture capitalists and angel investors, is calling for an extension of 6-12 months to the review period for these rules through this open letter to the Chancellor, which has already amassed over 1700+ signatories.

A petition by fellow angel investor Becky Lodge is also currently being circulated and supported by various organisations. An extension would facilitate additional consultation and analysis, and in best case scenario a reassessment or overturn.

Sarah King, CEO of Obu, emphasises:

“Angel investors shape our world. They are the gatekeepers to an investment ecosystem which prioritises the problems that get solved, the innovations that thrive and the start-ups who have the opportunity to go on to have real impact.”

Tom Roberts, Founder of Xterna says:

“In Jeremy Hunt’s autumn statement, he stated that he would back business, boost the economy and drive growth whilst recognising that SME’s make the majority of the UK’s business backbone. I don’t understand how this consultation enables that – creating additional barriers stifles his intentions.”

What lies ahead

Although there will still be places for women to receive funding, business owners will find it harder to find properly validated or accredited female angel investors in the UK.

This vulnerability may expose them to unethical or fake angel investors and scams, and increase the risk of fewer legitimate and vetted funding options.

While the point is really that there should not be these barriers at all, women are rarely suppressed by labels or the demeaning of their efforts; and we can only hope this encourages more women to continue to support themselves and others.

Even if the work is not considered “official”, the results will be.