It has been reported that the Chancellor will reverse the increased wealth threshold for angel investors.
This comes after sustained lobbying from the British Beauty Council for the protection of monetary access for beauty entrepreneurs
According to the Value of Beauty report, the beauty industry boasts a higher proportion of micro (78%) and small businesses (95%) compared to most other industries. What’s more, the sector supports women, and those from ethnic minority backgrounds, at a better rate than other sectors.
Key to the success and growth of our diverse and accessible sector are the contributions from angel investors at the initial start-up phase of brands. Vogue Business states: ‘British haircare line Sam McKnight has investment from the makeup artist and founder Charlotte Tilbury, while the new salon hair colour concept brand Yuv, founded by Francisco Gimenez… received investment from Hourglass founder Carisa Janes’.
What’s more, outside of the UK, feminine care brand Ketish received angel investment from Huda Beauty’s investment arm HB Investments (founders pictured).
However, investment protections for numerous investors are currently under threat following the Government’s announcement to change the high net-worth individual threshold from £100,000 to £170,000.
The proposed changes aim to increase protections for investors amid a rise in the use of retail investment platforms however, there has been backlash from a number of sectors due to the limitations this places on – particularly – female investors.
Knowing the importance of angel investors for growth and innovation in beauty, the Council has held meetings with the Department for Business and Trade and written to the Minister.
In the letter, the Council sets out the key challenges this new policy poses. These include: vulnerability of early-stage start ups due to limited access to capital; the squeezing out of female, ethnic minority, angel investors from the environment; and the risk of beauty investment becoming an elite-only activity, undoing huge amounts of good work to address this gap.
In order to overcome these hurdles, the Council has called on Government to:
- address the concerns outlined regarding the revised threshold and allow for further consultation on, or reversal of the policy, actively involving women and underrepresented investing groups;
- hold detailed discussions on the possibility of different inflation metrics potentially being applied rather than a blanket rate, and
- investigate the potential for new investment angels to be permitted to view proposals but given a ‘cooling off period’ from which they can invest funds. This would address concerns that the investor comprehends the risks associated with early-stage ventures and doesn’t overcommit their capital to risky and illiquid businesses.
The British Beauty Council urges the Government to announce the reverse of this limiting policy and will be awaiting announcements in the Spring Budget 2024.
