Do you know what an angel investor is? Well ladies, listen up because we
need more of them. Business Insider asked, “Where Are All the Women Angel Investors?” to highlight the work that the Pipeline Fund Fellowship (PFF) does in training female philanthropists to become angel investors and to talk about the severe lack of female angel investors.
What is an angel investor?
An angel investor is basically an individual who invests his or her own money in an entrepreneurial company. Typically, they seek a better return on investments than they could get from traditional investments (i.e. stocks, CDs, savings accounts and bonds), but assume more risk. Most angel investors are not millionaires, but make between $60,000-$100,000 a year and are professionals employed in other fields. You may unknowingly have a few right under your nose.
What’s the problem?
There are not enough women angel investors. According to Business Insider article, 90% of angel investors are male, meaning that women are clearly losing out. I bet you wonder what the lack of women angel investors means for female entrepreneurs or for working towards economic equality. It’s simple: women do not get enough outside financing to start a business or to grow their small enterprise. For example:
-In 2008, only an estimated 6.8% of venture capital went to women-owned businesses.
-There are only about 10 million woman-owned firms in the U.S. compared to the 14 million men-owned firms.
-Women start businesses with less capital than men and are less likely to take on additional debt to expand their businesses.
-Women are estimated to start a business with only 64% of the capital levels of businesses owned by men.
I am pretty certain that I do not need to remind you all that half of the population are women—and more than half of college graduates are women.
How do we strengthen the pipeline?
We can create more women angel investors. To do this, we must first educate more women on equity investments and venture capital. Second, we need to set up more networks that support investment in women-owned businesses. There are already a number of non-profits and businesses that facilitate the funneling resources towards women entrepreneurs. A few of these organizations include:
-Golden Seeds - a group of 170 women located in New York, Philadelphia, Boston and San Francisco who are dedicated to investing in early stage companies created by women.
-Springboard Enterprises – created in January 2000, which has since helped more than 400 women-led companies and built more than $5 billion in equity financing.
-Pipeline Fund – a social venture fund that invests in women-led for-profit social ventures and trains women to be angel investors through their fellowship program.
Time and time again, I meet young women who have an idea, but believe that they have to save up and invest all of their money to pursue their dream. Wrong! There are even resources that entrepreneurs can use to turn ideas into business plans, including the U.S. Small Business Administration and The Ladies Who Launch.
I want to reiterate one key idea: once women make it big, they should reinvest. Women should invest in each other because the number of woman-owned businesses has grown twice as fast as male-owned firms in the past decade. This means that more women are taking risks and starting new businesses.
Investing is risky, but if you think you can take the risk—choose today to feed the pipeline for the generations of entrepreneurs to come, and if you have an idea and want to start a business, think about putting that business plan together this week—not years from now. Become or find a mentor–there are tons of organizations out there to connect people, search for one in your city or ask an owner of a business you admire to counsel you. Ladies, remember to start small, but dream big.
Photo Credit: Snap2Objects
