My Hometown's Women Angel Investors

I may write a report with that title some day.  As far as I know, I can’t yet.  My hometown doesn’t have any women angel investors.

According to the Center for Venture Research (.pdf) in its March 31, 2010 report, in 2009 women angels represented 11.3% of the angel market.

Of 9 apparent angel investors in a hometown project, then, one would predict the list would include a female.

It doesn't.  And in preparing Handshake 2.0’s Angel Investor Guide to Blacksburg, Virginia, we didn’t find women angel investors on other lists, either.

What I don’t know is whether or not this is a problem.

An angel investor must be an accredited investor and meet several criteria, including a net worth of a $1 million or an individual annual income of $200K per year.  Women in my hometown qualify.

I see three possibilities.

1. Obstacles to opportunity prevent women from becoming angel investors.
2. Women are unaware of angel investing as an investment opportunity.
3. Women are aware of angel investing as an investment opportunity and choose not to participate.

One would be a a problem.  Two can be changed if merited.  Three represents a conscious choice.  I champion that.  So I am interested in possibilities one and two.

Why am I interested?  We're a corporation with a vision for regional economic development.  Current development initiatives are focused on entrepreneurship, particularly with regard to starting, mentoring and funding technology companies, primarily started by men, primarily funded by men.  I want to know that the small percentage of women angel investors (currently zero according to my research) is not a fundamental flaw in the big plan.

Does our region need women angel investors to grow?  If any angel investor will do, man or woman, I've got other sizzling subjects to think and write about.  If we do need women angel investors, then let's remove any obstacles that exist and let women know about angel investing.  If they choose to participate, let's create a hometown in which their deals can thrive.

***

From Angel Investing Needs More Than Just a Few Good Women on the Kauffman Foundation 2006 report Women and Angel Investing: An Untapped Pool of Equity for Entrepreneurs(.pdf):

The report notes that the total number of women angel investors is smaller than women's collective wealth, education, and experience suggests is possible and calls the shortage of women angels "as a missed opportunity for women, for the entrepreneurial community, and U.S. competitiveness as a whole..."

"Angel capital, whether invested through organized angel groups or by wealthy individuals acting independently, is essential to entrepreneurial start-up activity in the United States," said Carl Schramm, President and CEO of the Kauffman Foundation. "Considering that women's financial power and wealth has grown in the past 20 years -approaching half of the nation's net worth - it appears women are under-represented in this type of investing and that we are missing an opportunity for new investments and perspectives. The gap between the potential and actual participation of women as angel investors raises important questions that need to be addressed."

From the Center for Venture Research (.pdf) March 31, 2010 report:

Women-owned ventures accounted for 21% of the entrepreneurs that are seeking angel capital and 9.4% of these women entrepreneurs received angel investment in 2009. Both the number of women seeking angel capital and the percentage that receives angel investments are low compared to the overall market. These data indicate that when women do seek angel capital they lag behind the market yield rate by 5%.

From Confidence and Angel Investors: Does Gender Matter?, 2008:

We investigate whether men and women angel investors have different levels of confidence based on participation in the angel capital market, rate of investments, and stage of investments. We find evidence consistent with women angels having lower levels of confidence compared to men, although we do not suggest that this difference is deleterious for women angel investor's wealth. However, women entrepreneurs, who disproportionately seek funding from women angels, may have more restricted access to early-stage capital than men.

Comments

[Monica]

Hey Anne: thanks for researching into this curiosity. There is one women in the NRV. However she does not participate in the standard practices and policies set forth by the men, i.e. the accreditation, etc. she just quietly goes about her business and works with small start ups and doesn't want her name mentioned. i.e. she made the conscious choice to conduct business separately from the "angel investing " mindset.
Monica

[Gail]

Anne, I would put a big "ditto" to Monica's comments. There are several women in town who would easily qualify to be Angel Investors and are active business women, but I don't know what keeps them from openly participating as an angel. Good questions.

[Anne Giles Clelland]

On April 7, I pitch. On April 8, I listen. I am attending the full-day workshop on angel investor funding at the VT KnowledgeWorks Entrepreneurship Summit. I will share what I learn.

http://www.vtknowledgeworks.com/esummit2010/angelfunding.html

And I am just beginning to learn. Again, few women angel investors in our area may not be a problem. I want to investigate further.

Thank you very much, Monica and Gail, for helping me think.

[Robert Giles]

An important insight.
I hypothesize that they will emerge and that a statistical analysis (say 10 years from now) will show female investors as a group invest more than males in businesses with a social dimension, long horizon, basic food sources, and health/wellness relations. The proportions will change rapidly in an increasingly fossil-energy-short world.

[Anne Giles Clelland]

I think your hypothesis may prove correct.

I have a follow-up post here:

http://annegilesclelland.typepad.com/blog/2010/04/writing-and-talking-about-angel-investing.html

Although I don't have data to back it yet, this is a conclusion I am drawing from conversations about angel investing: "She wants growth, he wants R.O.I."

Again, I only have anecdotal evidence, but, so far, my interviews with women who do invest indicate they want to help a company grow. They know the person in whose company they're investing and they even seem disinterested in returns. They want the enterprise to work, to make it, to grow.

All very interesting. Thank you very much for contributing to this conversation.

[Anne Giles Clelland]

"Women run 40 percent of privately-owned businesses, but only 8 percent of venture-backed tech start-ups."

From "Where are all the women?" Inc.:

http://www.inc.com/staff-blog/where-are-all-the-women.html

[Anne Giles Clelland]

Experience, Professional Networks, Encouragement, Support are Keys to Success for High-Growth Women Entrepreneurs, Kauffman Study Finds

http://www.kauffman.org/experience-networks-encouragement-support-keys-for-high-growth-women-entrepreneurs.aspx

[Anne Giles Clelland]

2010 NASVF Conference
Thursday, October 14 at 8:45am – 9:45am

A Woman’s Place: Does Gender Matter in the World of High Tech Entrepreneurship?

Is there a dearth of women high tech entrepreneurs? The panel will explore whether women entrepreneurs have less access to innovation capital than their male counterparts, possible reasons for any disparity, and potential solutions to level the playing field.

Ruth M. Shuman, Ph.D.
Program Director, SBIR/STTR
Division of Industrial Innovation and Partnerships
National Science Foundation

Daphne Dufresne
Managing Director
RLJ Equity Partners

Julie Lenzer-Kirk
Chief Muse & CEO
Path Forward Center for Innovation and Entrepreneurship

Karen E. Kerr, Ph.D.
US Head of Business Development
Intellectual Ventures
NASVF Board of Directors
Moderator

http://www.nasvf.org/index.php?option=com_wrapper&view=wrapper&Itemid=48