Briefing: New angel investing rules could worsen ’existing disparities’ for female insurtech bosses

There could be a sizeable reduction in the number of women that are able to invest in startups following recent government changes to angel investing thresholds.

An angel investor invests their own money in a small business in exchange for a minority stake, which is typically between 10% and 25% of the company.

Effective from 31 January 2024, the UK government changed the definition of a high net worth (HNW) individual investor, raising the salary threshold to £170,000 per year – up from £100,000 a year previously.

Although the government introduced this change to increase the protection for investors following an increase in the use of retail investment platforms, only 72,500 women in the UK earn this salary, as reported by This is Money in February 2024.

According to the Women Angel Insights report, published by the UK Business Angels Association (UKBAA) in September 2022, there are 36,800 angel investors in the UK. Out of this figure, only 14% – equating to 5,064 individuals – are women.

So, how does the change in earnings threshold for angel investors impact insurtechs?

Insurtechs often look to angel investors for funding, but given that there are so few female chief executives and founders in the UK insurtech sector, the government’s new rules could further compound the lack of diversity at this senior level and put a stop to female investors backing women-led businesses, preventing the sharing of funds and experiences.

Katie Palencsar, partner at fintech investment firm Anthemis Group, explained: “Female investors are two times more likely to invest in female founders.”

Compounding ‘gender gaps’

I recently spoke to Janthana Kaenprakhamroy, founder and chief executive of insurtech Tapoly, who is one of the few female insurtech bosses and founders in the sector.

She told me that in the insurtech sector, ”where female founders and chief executives are already rare, these changes [to the angel investor salary threshold] could exacerbate the gender gap. It’s crucial to acknowledge and address these gender gaps, particularly within investment opportunities”.

She continued: “Given the persistent income and salary gaps for women, the recent changes to the high net worth threshold in the Treasury startup coalition angel investment rules are concerning.”  

Kaenprakhamroy added that the threshold change ”not only risks worsening existing disparities in diversity and inclusion within the startup ecosystem, but also poses significant challenges for female angel investors”.

The aforementioned UKBAA report confirmed Kaenprakhamroy’s perspective – it found that less than 0.5% of female angel investors have achieved a portfolio of 10 startups or above.

A ’vicious cycle’

The new rules around angel investing mean businesses will also need approval from city regulators before marketing themselves to investors.

Palencsar said: “This legislation sends ripples across the UK economic landscape, particularly impacting women already contending with the pervasive wage gap.

“Access to diversified investments, like angel investments, is pivotal in addressing this disparity. The detrimental connection between the wage gap and limited investment avenues perpetuates a vicious cycle, ultimately contributing to the widening wealth gap.

“Disturbingly, these changes simultaneously obstruct two crucial pathways to wealth building – through the potential for female investors and female founders.”

For Ambra Zhang, co-founder and chief executive of newly launched insurtech, Juniper, admitted that having an investment background – from her two year stint at private equity firm Eurazeo between 2021 and 2023 – “made things easier” when it came to turning her hand to entrepreneurship. Juniper secure £1.5m in a pre-seed funding round. 

Zhang noted that women often struggle with “how to sell themselves” to angel investors, especially during the early stages. She said that “an angel investing pitch becomes a very personal relationship” compared to a typical investor pitch.

Possible deterrent? 

Although this commentary suggests that women investing in female founders could dwindle, the issue becomes further amplified when applied to the insurtech market because of the level of insurance and technology know-how that is often required to understand pitches.

Ed Gaze, chief executive of Innovative Risk Labs, explained: “Insurtechs can struggle to raise [investment] via angels because the complexity of the industry often deters experienced investors who lack sector specific knowledge.

“Consequently, insurtech founders typically rely on connections within the insurance sphere, personal networks, friends, family and a select few angel funds willing to explore the sector.”

For Kaenprakhamroy, one potential initiative the government could deploy instead is “implementing thresholds based on gender, to level the playing field for women in the investment and business arena”.

I personally think this could be the way forward, especially as countrywide gender pay gap reporting still indicates that in the main, women in the UK are earning less than their male counterparts.

Both technology and insurtech are often considered a man’s game, however there is so much potential in these sectors for women.

The insurtech industry has more work to do to garner greater attention from females – and the new rules from the government just compounds a long-standing diversity issue.