Taking matters into our own hands: 5 reasons to invest in female founders

CW News published by CW (Cambridge Wireless), under Discovering Start Ups

Angel Academe, a Discovering Start-Ups 2018 judge, is an award winning angel network who backs ambitious technology start-ups with at least one woman on the founding team. Here, Sarah Turner explores how more can be done to encourage diversity in technology and entrepreneurship.

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A lot has been written about the low rate of funding going to women-led businesses. According to research by Beauhurst, only 9% of capital invested in the UK in 2016 went to companies with at least one female founder and 86% of deals funded in 2016 had no female founder at all.

There’s clearly no single reason for this. But a very big one stands out: there are very few women investors. Women represented only 9% of angel investors in the 2017 British Business Bank survey and, according to Diversity.vcresearch, only 13% of decision-makers at UK VC firms are women. 66% of UK VC firms have no women in their decision-making teams at all.

The dominant culture in investing is very clearly male and that won’t change until the number of women participating increases dramatically — to at least 30% or ideally more.

1) We can change the ratio

We flip this on its head at Angel Academe: about 70% of our members are women, so the dominant culture is female and there’s a genuine appetite for backing other women. In fact, at least one woman on the founding team is a pre-requisite for investment. Our research last year with female angel investors from around the country (not just our group) backs this up: 59% of the female angels we surveyed had invested in at least one woman-founded company. For those women, nearly 70% of their investments were into women-founded businesses. Nearly half of them had only invested in women.

So women investors account for a lot of 9% of capital that went to female founded companies and the 14% of funded deals with a female founder! It seems that gender bias goes both ways. Imagine what would happen if tens of thousands of women were investing, not just hundreds.

2) We have the power

Women own 48% of the UK net wealth. There are many thousands of women in the UK who could put some of their wealth to work by backing startups but who don’t. Again the reasons are numerous and complex, but a major one is they just don’t know about angel investing or how to get started with it. Only 6% of the women we surveyed as part of our research and who had a financial advisor had heard about angel investing or the tax breaks from them. Many felt better informed on the subject than their IFAs! There’s also very little coverage of angel investing in the media.

But we know that given the knowledge and network, women will invest. Our members have invested over £1.5m in the last 12 months into women led startups. Imagine what would happen if tens of thousands of women were investing…

3) We can level the playing field for female entrepreneurs

We see hundreds of businesses every year led by confident and ambitious women with the potential to scale globally — far more than we have the capacity to invest in. They don’t need special training or coaching or women-only spaces, just a level playing field, especially when it comes to raising investment. That means walking into rooms filled not just with men, but with other women. Not just one or two, but in equal numbers.

4) It’s easy to be an angel investor or crowd-funder

Our angels are entrepreneurs and senior professionals. Some are on career breaks and others enjoying portfolio careers. They all want to do something interesting, useful and stimulating with a proportion of their investible assets by supporting entrepreneurs and new businesses. Most of them are women, but men who want to be part of a diverse network are also very welcome. We have a wide mixture of skills, business and angel investing experience. But through collaboration, mentoring and practice we learn from each other how to assess investment opportunities and the teams behind them, make risk-aware investment decisions and support the businesses in our portfolio post-investment.

Entry levels for angel investing are relatively high (most angel networks set their minimum at £5,000 or £10,000 per deal), but you can invest far lower amounts via crowdfunding platforms. Whether angel investing or crowdfunding it’s absolutely essential you do thorough due diligence before making investments and think seriously about doing it with others who have complementary experience to your own. And never ever invest money you can’t afford to lose or have tied up for several years.

5) The returns from angel investing are not just financial

Make no mistake: women invest for financial return just as much as men. But equally important is the desire to support entrepreneurs and new businesses as well as putting some of their spare capital to work in interesting and useful ways. It’s also a great way to stay up to date, build your network and have fun.

Note from CW

CW nurtures diversity and inclusion within the technology community. Over the past year we have initiated campaigns such as Unplugged, which provides a networking forum for the younger generation of engineers, and the Inclusive Innovation Conference, which brings together senior leaders to define the business case for diversity. Speaker and audience diversity metrics at SIG events are reviewed at a board level to ensure that the CW community visibly demonstrates leadership in this field.

Out of the ten finalists in Discovering Start-Ups, two were founded solely by women (Camnexus and Syrona) and one further finalist (Capito) has female representation on its leadership team.  We will continue to encourage participation in Discovering Start-Ups from every technology entrepreneur with a promising idea and look forward to this proportion growing in future years.

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