Paula Skinner

From 31 January 2024, new regulations under the Financial Promotions Order, mean that HNWIs are classed as having an annual salary of £170k or net assets of £430k. Previously, the salary and asset thresholds were £100k and £350k respectively.

With these changes, it now means a drop from 14,000 to 3500 women in Scotland who will be classed as being high net worth, reducing the pool of potential angel investors active in Scotland.

The new rules were first announced by Chancellor Jeremy Hunt in November last year and are designed to protect investors and tighten regulations around financial promotions.

However, investment experts from law firm Harper Macleod and women-led angel investment group Mint Ventures, believe the changes will lead to fewer women angel investors and, in-turn, less funding going to women-led businesses.

The Scottish Government’s 2023 Pathways report into women in entrepreneurship highlighted the existing challenges faced by women seeking investment. The review highlighted that one in five entrepreneurs in Scotland are women, and only 2% of institutional investment goes to women-led companies.

Paula Skinner is a partner in the corporate team at Harper Macleod and specialises in advising businesses seeking investment. She leads an all-women team and says the new regulations will have a disproportionate effect on female investors and founders, despite the best intentions of the changes.

Ms Skinner said: “We know already, through our own experiences, that investors often invest in business owners who they can relate to.

“From a female perspective, that tends to mean that women investors invest in women-led businesses, and vice versa.

“The opportunities for women-led businesses to secure investment are already challenging, so it is highly likely we’ll see the unintended consequences of these changes meaning opportunities become even more scarce for entrepreneurs who are women.”

She continued: “We also know that entrepreneurs who are women start and grow businesses in sectors which are important to the Scottish economy, such as retail, food and drink, and the creative industries, so there could be a negative impact on wider society.

“Anything which sends the message that it is becoming harder to start and grow a business, regardless of gender, needs to be challenged.”

Ms Skinner has advised several successful women-led businesses and organisations in recent years, including Bayile Adeoti at Dechomai, Angela Prentner-Smith at This is Milk, Ann Attridge at Klik2Learn and Evelyn McDonald at Scottish EDGE.

Gillian Fleming, director and co-founder of Mint Ventures, a women-led angel investment group, said: “Mint Ventures enables women to join that are not high-net-worths, via the validation rule of being a member of an angel group for six months.

“Mint is one of the few angel groups that makes angel investing so accessible to women and offers this route into angel investing with an established online six-month training program to support angels.

“We need to see updated FCA criteria that reflects the gender pay gap and acknowledges education rather than timescales as a route into angel investing.”