It sucks, but women entrepreneurs have a harder time getting equity financing than men. But, women have powerful tools for helping other women start and grow high-impact companies. They have their own expertise, influence and money.
Sure, this is a feminist issue, but it’s also an economic one. If women entrepreneurs were funded to the same degree as their male counterparts, 6 million jobs would be created in 5 years, according to Babson College.
“Unfortunately, gender bias -- as well as racial bias and other forms -- are still prevalent,” said Freada Kapor Klein, partner, Kapor Capital and Pipeline Fellowship mentor. “Most biases are unintended and therefore sometimes harder to address. But investors or entrepreneurs or managers who want to mitigate their biases can take steps to do so.”
“Investors by nature tend to invest into companies where the people who run the companies look like them,” said said Rodney Sampson, serial innovator, entrepreneur, angel investor, author, and executive in charge of diversity and inclusion of A Mark Burnett Productions & Hearst JV + ABC’s Shark Tank. “To this end, the solution is to create, empower, and train more angels that look like the fastest growing segment of entrepreneurs.”
Yes, ladies, your money, expertise, and influence could be the fuel that fires up a start-up company or scales a company into the big time. By leveraging our current power, we can gain more power. Women who become angel investors can also open doors to opportunities, such as customers and additional money, and advise the companies they invest in.
Impressively, the chances for a company’s success increase when women are on the management team, according to research conducted by Dow Jones VentureSource, Kauffman Foundation, Illuminate Ventures and the SBA.
If you’re wealthy enough to be an accredited investor (a net worth, excluding your home, of at least $1 million or an annual salary of at least $200,000 if you are single and $300,000 if you are a couple), angel investing in women-led companies can be financially savvy and help build a ladder for women to the C-suite. These women are more likely than men to invest in women-led companies and some will sit on the boards of the companies they invest in. Angel investments in women have a ripple effect on the companies they invest in.
But angel investing is a mystery to most women, according to Monali Jain, an active angel investor and Pipeline mentor. Training can demystify the process.
During the past decade, the ecosystem for high-growth, women-led companies has been building. Leadership organizations, such as Astia and Springboard Enterprises, provide training and access to capital for female entrepreneurs. The number of women-led angel funds, such as Belle Capital, Golden Seeds, and Texas Women’s Fund, has increased, according to Kay Koplovitz, chairman, Springboard Enterprises. “Angels are getting organized around specific sectors, too, and improving their due-diligence process.” However, the missing piece of the puzzle has been training for women who wanted to become angel investors.
Natalia Oberti Noguera connected the dots and in 2011 she launched Pipeline Fellowship -- a boot camp for women who want to become angel investors. The boot camp includes instruction, mentoring, and hands-on investing. At the end of the boot camp, the 10 classmates choose and invest as group in a women-led social venture. Each woman puts down $5,000 for a collective $50,000 investment. Pipeline has trained more than 70 women, who have committed more than $350,000. The boot camp has expanded from New York City to Boston, Chicago, Los Angeles, San Francisco, and Washington, D.C.
The success of the initiative can be attributed to “the conviction of the founding [Pipeline] team, their ability to successfully address the glaring need for a structured knowledge-sharing platform, and most importantly, delivering the missing piece in the angel ecosystem: data-supported impact of women on improved investment returns,” said Eghosa Omoigui, venture capitalist and Pipeline mentor.
The ecosystem players are making a difference in the number of women funding companies and the number of women-led companies being funded. “Our ongoing commitment is simply the result of having observed first-hand the impact of the work of the Pipeline Fellowship and the ever-expanding network it has built,” said William Schnoor, co-chair, Goodwin Procter's technology companies practice and Pipeline boot camp host.
“I hear from women all the time ‘Oh, I wouldn't know how to invest in startups,’” said Angela Lee, founder, 37 Angels, a community of women investors committed to funding early stage startups, and Pipeline alumna. “My take is that angel investing is something you can only learn by doing, and that nobody knows what they are doing to start. So if you're thinking about it, take the plunge and start!” Here are eight reasons to take the plunge as part of a training program.
1.) Use your wealth to advance a woman’s economic agenda
Women’s economic impact is a force to be reckoned with: 45% of American millionaires are women. And our economic impact is growing, according to Pax World Investment.
Women’s increasing economic power is fundamentally changing the world, said Jackie Vanderbrug, senior vice president at U.S. Trust on CNBC. “We call this broad trend womenomics ... We [women] can invest differently or use a gender lens in investments.”
“We want to especially encourage women to put more 'skin in the game' with their wealth by becoming angel investors,” said Ruta Aidis – Project Director, Gender-The Gender Global Entrepreneurship and Development Index (GEDI). “Why? So that they can play a more active role in a business development beyond 'donating' funds.”
“If you want a better world, you have to vote with your dollars,” Deb Nelson, executive director, Social Venture Network, a community for social entrepreneurs. “Supporting mission-driven women entrepreneurs is an important way to do that.”
2.) Build confidence in investing
This may come as no surprise, but 78% of women don’t want to be actively involved in the investment process. “Women feel like they know less than the average investor but men feel they know more than the average investor. Men lean into the investment conversation and women may tend to lean out of the conversation,” said to Michael Liersch, head of behavioral finance at Merrill Lynch on CNBC citing Women and Investing: a Behavioral Finance Perspective, research he conducted. It’s about confidence in your investing ability. Confidence can become overconfidence; caution can become timidity. What matters is how each person puts his or her natural tendencies to work in the pursuit of personally meaningful financial goals.
Women who have confidence are excellent investors, both professionally and personally. For the third year, women-owned or managed hedge funds perform better than those run by men, according to Rothstein Kass, a professional services provider to the financial services sector.
Women are better investors than the average man, according to LouAnn Lofton, author of Warren Buffett Invests Like a Girl — And Why You Should, Too. Women spend more time researching their investment choices, tend to take less risk than men do, and hold onto their investments longer. Women are also more likely to seek out information that challenges their assumptions.
“I feel that the small cohorts that Pipeline sets up provide a great opportunity to take that first step as an angel investor,” said Carol A. Curley, angel investor and managing director, Golden Seeds. “I am convinced that having a focused process with a like-minded group of co-investors is a great way to continue to add to the ranks of women angels.”
“Making women aware of their capabilities, giving them the tools by which to succeed and exposing them to successful women investors are the essentials to move us forward,” said Susan Preston, active angel investor, consultant, educator and Pipeline mentor.
To determine if becoming an angel investor is right for you, ask yourself these nine questions.
3.) Put your knowledge to work in new ways
“I had just sold my business,” said Kellee Joost, angel investor and Pipeline alumna. “What a great way to take what I learned (and earned) as an entrepreneur, promote the leadership of women, and help cultivate future classes of female, impact-driven founders.”
Heather Cabot, Columbia University Graduate School of Journalism, former ABC News correspondent and Pipeline alumna, finds sharing her media training and strategy skill set very appealing.
“Most people have one thing they know really well, even if they doubt it sometimes,” said Christina A. Brodbeck, managing partner, Rivet Venture, which funds companies targeting women, and a Pipeline mentor. “That hands-on expertise coupled with financial resources can really accelerate the growth of an entrepreneur and business.”
4.) Increase your skill sets
There are many ways to gain new skills. Pipeline provides a new avenue. “I decided to apply to Pipeline to invest in myself, to fuel my intellectual curiosity, and challenge myself outside my comfort zone while also advancing sustainable solutions to our problematic realities--all in a safe space,” said Rebeca Rangel, who is studying to be a lawyer while on leave as senior vice president, corporate social responsibility at the Bank of West.
Adults learn best through experiential learning. “I could learn by doing and I got to do it with a team of dynamic women,” said Anna Curran, founder of Cookbook Create and a Pipeline alumna. “There are very few places that you can get a hands on experience in angel investing-- the Pipeline Fellowship is absolutely one of the best.”
“I was looking to expand my professional network and get involved in the start-up community,” said Cabot. “I am inspired by entrepreneurs and the opportunity to learn how to be a smart investor while supporting women and social causes just seemed too interesting to let it pass me by.”
5.) Increase the diversity of new high-growth companies
“People enjoy doing business with those that they know; so broadening the universe of investors should, in turn, make capital (intellectual and financial) more accessible to a wider group of entrepreneurs, expanding the economy,” said Erica Frontiero, senior vice president, GE Capital and Pipeline alumna.
“Anything we can do to get more women involved in angel investing will have a high impact. Not only will it lead to more female founders getting funding, it will get more women onto boards and hired as C-level executives,” said Kristin Calve, founder, Topstone Angels, an investment management firm, and Pipeline alumna.
“It's simple: Entrepreneurship has great potential to help improve people's lives, but it's only going to achieve that potential with the full participation of everyone who has talent and ideas,” said Anil Dash, an entrepreneur. “We need to do a lot of work together to overcome the systems of exclusion that have been in place for years, and Pipeline gives us a framework to do exactly that.”
“As a male investor, I am excited about there being more women angels as they bring a varied skill set and fresh perspective to the process,” said Robert Delman, managing director, Golden Seeds and a Pipeline mentor.
6.) Do good and get a return on your investment
I was struck by the proverbial thunderbolt, when I read Women, Finance the World You Want by Whitney Johnson. One female social entrepreneur she interviewed from Fast Company’s League of Extraordinary Women chose to be a nonprofit rather than a for-profit because she felt women were willing to donate freely to her cause, but would not invest in it as a business. “When you donate, you are giving something. When you invest, you can expect a return,” writes Johnson.
“Investing in women needs to move beyond charity and philanthropy,” said Kelly Hoey, speaker, strategist, co-founder of Women Innovate Mobile (WIM) Accelerator, board member and Pipeline alumna. “Women will effect more of the change they want to see by taking control of their investments and creating greater wealth for themselves as well as other women.”
“I wanted to learn about angel investing, particularly in the social impact investing space,” said Kathryn Salmanowitz, angel and Pipeline alumna. “After working in the nonprofit sector for 15 years, I believed that investing in social entrepreneurs was in many ways a better path toward solving social and environmental problems than philanthropy alone.”
“You owe it to yourself and the causes you care about,” said Rangel. “ If you are already writing checks to nonprofits as part of your philanthropic activities, this is a natural next step.”
“This [angel investing] is one of the most powerful things you can do with your money," said Judy Robinett, angel, super connector, author of a soon to be released book, How to Be a Power Connector: the 5-50-150 Rule for Turning Your Business Network into Profits and Pipeline mentor. “Women globally have little-to-no access to capital. Growing companies is growing jobs, increasing net worth, changing the calculus of not having equal pay. You don’t need an MBA. Jump in.”
7.) Spread your wings in many directions
Alumni have put their knowledge to use in a wide variety of ways. “I have made 7 investments, I write a Funding 101 series on TheNextWomen.com about financing and funding business and mostly recently, I have become a Founding Member and Market Lead for Astia Angels NYC,” said Elizabeth Crowell, entrepreneur, angel investor, and Pipeline alumna. Leah Belsky, entrepreneur, angel investor and Pipeline alumna has been able to tap into a global network of investors as she’s moved for her company to London and DC.
Calve, Hoey, and Lee were so inspired by Pipeline that they started companies that expanded the entrepreneurial ecosystem by providing additional opportunities for angels and entrepreneurs to meet, training to become angels or to beef up entrepreneurs’ skills. Joost and Lorine Pendleton, a law firm business development executive, former attorney and Pipeline alumna have joined the boards of the companies they have invested in.
“Wanting to do something is easy,” Viane Riese. “But good intentions don't change the world, action does. There's no failure on this journey - just lessons learned, which can always equal success.”
8.) Provide sustenance for women-led social ventures startups
Some of the women-led social ventures that received funding from Pipeline Fellows include:
- Cissé, founded by Diana Lovett, offers a new line of gourmet baking and hot cocoa mixes. It buys organic cocoa from small-production cocoa growers in the Dominican Republic at a fair price. She was able to raise money while pregnant.
- DayOne Response, founded by Tricia Compas-Markman, addresses the vital need for clean water in disaster relief with The DayOne Waterbag, which purifies water quickly and efficiently.
- Happily Ever BorroWED, founded by Brittany Haas, rents designer bridal accessories at a fraction of the retail price. It is aimed at reducing waste in the wedding industry, as well as breaking down financial barriers to wearing quality accessories.
- PhilanTech, founded by Dahna Goldstein, provides an online grants management system that helps funders and grant recipients streamline the grants administration process to focus more resources on program and service delivery. She shares her story in 5 Ways to Win Over a Social Angel.
- Repurpose, founded by Lauren Gropper, is focused on developing, sourcing, marketing, and selling innovative, high-quality, plant-based compostable products in the consumer retail (B2C) market, which currently includes cups and utensils and will expand to trash bags, sandwich bags, and more.
“One check. To take your first step as an angel investor, all you need to do is write one check,” said Jennifer Lum, co founder of Adelphic Mobile, active angel investor and Pipeline mentor. “Once you find a company that you truly believe in, write them a check and hop on board for the ride!”
You can sign up for Pipeline Fellowship’s spring 2014 angel investing boot camps in Chicago, DC, and New York, but time is running out -- the deadline is Monday, February 17 at midnight, EST.
If you would like to receive updates on the Gender-Global Entrepreneurship Development Index (Gender-GEDI) and case studies written by Geri Stengel, please complete this form. Case studies will provide real-life examples of how 10 women in the U.S. overcame barriers identified in Gender-GEDI to found and run high-growth companies. The case studies also will be codified into lessons learned and best practices.
