As I´ve written before in this blog-actually, in my last post-angel investing is the bane of entrepreneurs. Historically, it´s been even worse, almost non-existent, for women, who for a myriad of reasons, don´t have the networks men do for raising $100,000 to $250,000 to get a business of the ground.
Ewing Marion Kauffman Foundation-well known for its research in entrepreneurship and emerging growth company-recently published a report highlighting the simple truth which desperately needed to be said: WOMEN NEED TO INVEST IN WOMEN-OWNED BUSINESSES.
Angel investing often comes through personal networking, raising money from fellow alum who have done well with their own businesses, or fraternity brothers, uncles, neighbors. For men, there it shows some bravado taking a risk to invest in a friend´s venture. It gives one certain bragging rights.
Hats off to the Kauffman Foundation for writing about something that has long been left unsaid. Thank you. Thank you. As the report points out despite the fact women are enjoying increased financial power and wealth, high net worth women remain an untapped source for start-up entrepreneurs.
According to the report, of the estimated 225,000 active angels who invested $23.1 billion in nearly 50,000 entrepreneurial deals in 2005, no more than eight percent are female, as estimated by several reports.
The good news is the report, Women and Angel Investing: An Untapped Pool of Equity for Entrepreneurs, found there is an increase in women’s interest in forming angel groups. Currently there are six women angel groups operating in the United States today with what the report dubbed as "clout" and committed capital. What´s more they found there is interest in starting women’s groups in as many as ten cities in North America. In addition, many existing women angels are aggressively recruiting women of wealth into angel groups that are not gender based.
“There is frustration among the women we talked to that more sophisticated and successful business women aren’t part of the early-stage investment food chain,” said Maggie Kenefake, Manager of Growth Entrepreneurship at the Kauffman Foundation.
The report found that there are behavioral and cultural differences between men and women angels, but they share common reasons for entering angel investing, including the desire:
"?¢ For an above average rate of return on investment
"?¢ To engage in the high-passion, high-energy world of entrepreneurship
"?¢ To mentor emerging companies
"?¢ For exciting “next stage” career opportunities
In addition, the report comments that women may find an opportunity in angel investing that is different for men: the chance to serve on corporate boards of directors. In addition, some women are attracted to angel investing as a means of supporting the growth and development of women-owned businesses.
The report was released in late April during the Kauffman Foundation-sponsored North American Summit of the Angel Capital Education Foundation (ACEF).