Investment Rules Exacerbate Gender Gap in Entrepreneurship
news published date 2 February 2024As both WIBF President and a female founder, I find myself compelled to address an issue that strikes at the very heart of our vibrant UK startup ecosystem.
The UK’s status as a haven for startups is under threat, not from market forces or innovation droughts, but from regulatory changes that have narrowed the field for potential investors. Specifically, female and ethnic minority investors, who have been making significant strides in the startup community, stand to be disproportionately affected.
Investment Rules Exacerbate Gender Gap in Entrepreneurship
From January 31st, the criteria for who can invest in startups has tightened, drastically reducing the number of eligible female investors. We’re talking about a potential 90 to 100% drop in some regions, with places like Northern Ireland and the North East of England potentially seeing their numbers dwindle to zero. As a national network this is a staggering blow. Particularly when you consider that 47% of new business owners in 2022 were women, yet they received a mere 1.9% of total VC funding— a figure that has stubbornly refused to budge over the past decade.
The heart of this challenge lies in the redefinition of what constitutes a High Net Worth (HNW) individual, a pivotal criterion for those seeking to engage with financial promotions and investment opportunities. The thresholds are set to soar—from £100k to £170k in annual income, and from £250k to a staggering £430k in net assets, discounting primary residences and pensions. This isn’t just moving the goalposts; it’s changing the game, potentially excluding thousands of would-be investors, with women disproportionately bearing the brunt due to systemic financial inequities.
These changes don’t just raise the bar; they transform the landscape, potentially sidelining thousands of potential investors. This is especially concerning for women and ethnic minorities who already face systemic barriers to accumulating wealth.
At WIBF, we’re not just watching from the sidelines. We’re actively working to challenge these changes. We’re rallying our community and have contributed to an open letter to the Chancellor, advocating for a re-evaluation of these regulatory adjustments. Furthermore, we’re mobilising our Entrepreneurs Community, spearheaded by the indomitable Beverley Brown, – also a female entrepreneur, to strategise and support our members during this critical juncture to strategise and support our members during this critical juncture. For those who wish to join this movement and contribute to shaping a more inclusive financial landscape, we welcome you to reach out at [email protected].
Call to Action
As we navigate the complexities of entrepreneurship and strive for a landscape marked by equality, fairness, and innovation, the imperative to reassess these stringent financial thresholds becomes clear. We advocate for a 6-12 month reprieve, allowing for a more comprehensive dialogue on the repercussions these new regulations may entail.
We are asking our national network to join forces in urging the government to reexamine this legislation. Your voice is crucial in this pivotal moment. Please lend your support by signing this petition:
https://www.change.org/p/urge-
This is more than a regulatory update; it’s a potential pivot point for the UK’s startup ecosystem and for the diversity of thought, experience, and leadership within it.