The Enterprise Investment Scheme Association (EISA), the official trade body for the Enterprise Investment Scheme (EIS), applauds the government’s recent reversal of changes to the definition of High Net Worth and Sophisticated Investors.

The move, announced in the Chancellor’s Spring Budget 2024, is viewed as a positive step towards supporting early-stage businesses and encouraging innovation. The U-turn comes after the Treasury raised thresholds for these exemptions in January, significantly limiting the pool of potential investors in early-stage startups.

Restoring Access for Investors: A Positive Signal for Entrepreneurs

The January changes, which raised the income threshold for high net-worth individuals and altered criteria for Sophisticated Investors, drew widespread concern across the ecosystem. Critics argued that these adjustments would lead to constrained funding for startups, with adverse effects on women investors, minority investors, and those outside London and the South East. The reversal is seen as a clear signal of the government’s renewed commitment to supporting early-stage businesses and fostering a thriving startup ecosystem.

The EISA, alongside other key players in the startup ecosystem, warned that the January changes could result in a 70% decline in the number of women able to invest in startups across the UK. The potential damage to the startup ecosystem and its role as a growth engine for the economy prompted a campaign led by the Startup Coalition. The EISA, along with organizations like UKBAA, Alma Angel’s Network, Extend Ventures, The Entrepreneurs Network, Enterprise Alumni, Angel Academe, and the Angel Investing School, co-signed the Angel’s Letter—a public plea to the government, supported by over 2,900 individuals, including EISA members.

Enthusiastic Response from EISA

Christiana Stewart-Lockhart, Director General of the EISA, expressed enthusiasm for the government’s decision to reverse the January changes. She stated, “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.”

The reversal is aligned with the broader efforts to enhance access to angel investment, including the British Business Bank’s regional angels programme, addressing regional equity gaps and promoting inclusivity in entrepreneurial funding. As the government signals its commitment to supporting early-stage ventures, the move is anticipated to have a positive impact on the landscape of angel investment and startup innovation in the UK.