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There's a quiet movement gaining momentum: increasing the number of women investors. As we see more women taking reins of companies and filling seats on corporate boards, the number of female investors has lagged. Studies show that women make up just 10-15% of angel investors and venture capitalists. Fortunately, this is beginning to change. For companies with high growth business models, investment patterns generally follow a path of bootstrapping, friends and family funding, taking angel investments, then seeking venture capital or corporate investments. While it's not difficult to imagine a woman investing in the company in a friends and family round, the path gets more tenuous at the angel investing stage. Angel investing has high barriers to entry both personally and professionally. It requires not only existing personal capital to invest, but also a savvy for a particular industry, possible success as an entrepreneur in that industry, an understanding of the business side, and a collaborative network of like-minded investors. One deal as an angel investor can require a hundred of hours of time on deal screening and due diligence, with only a 10% likelihood of success. Seasoned angel investors generally invest in dozens of companies over several years, spreading the risk. It takes moxie, a passion for entrepreneurs or startups, a high level of risk tolerance, a strong stomach, and a large pocketbook. While women excel at building networks, they generally find it easier to enter the networks of other women. People invest in what they know, where their comfort lies. Most investors invest within their existing networks, evidenced by men primarily investing in companies run by men. This chicken-egg cycle can be circumvented, but it requires significant effort in building women's networks. But it's effort that pays off: Jackie VanderBrug, Co-Leader, Gender Lens Investing Journeys at Philanthropy Indaba, researches the importance of needing diverse boards, advisory boards and founding teams in order to provide well-rounded expertise and increase performance. According to VanderBrug, diversity doesn't just mean gender; race, geography, and socioeconomic background also factor into the equation. According to the Kauffman Foundation, venture funds with women on their teams invest in women founders 70% of the time. In short, the more women investors at the table, the more women run companies are funded, and the pipeline of women run companies grows. The difference is that women entrepreneurs bring in 20% more revenue with 50% less money invested; therefore, investors who expand their networks to include more women founders will be more likely to reap the rewards. A small set of organizations has set their sights on training and connecting women who seek to become angel investors. Many of these organizations have hybrid models where they both train and invest, building and nurturing their own networks in the process.

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Administrator
Administrator on Dec 13, 2012 in Local News
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