Venture’s Angels

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Sarah Kunst

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Editor’s note: Sarah Kunst is a venture partner at Future Perfect Ventures and a contributing editor at Marie Claire magazine.

Gender diversity statistics in technology are depressingly, familiarly terrible. Top tech companies have an average of ~70 percent male workforce, with board and c-suite diversity in the single digits. Venture-capital funding is similarly grim with only 6 percent of funds employing female funders, down from 10 percent in 1999. One marked shift from the last dot-com boom, however, is the rise of the angel investor.

Angel investors ponied up $23 billion across 67K deals last year while venture investors doled out $27 billion over 3,700, according to a recent Forbes article. Their demographics aren’t as disruptive as their investments, however, with the ranks being 82 percent male.

But change is on the horizon; only a decade ago women made up less than 10 percent of angel investors. Now that number is closer to 20 percent, according to a recent Bloomberg article. More female angels means more womenfunded startups. Organizations like 37angels, Pipeline FellowshipGoldenSeeds have sprung up to back womenled startups.

Women control 80 percent of consumer spending, and they are stepping into the gap to control their investing. In the process, they are backing female founders and CEOs as they pursue entry into the billion-dollar echelons of tech company success.

I recently sat on the female investor panel at the Angel Summit conference with other women from across the country who are on a mission to make money while backing the overlooked female founder pool — Rebecca Kaden from Maveron Ventures, Lara Jeremko from UTIMCO and Kelly Keenan Trumpbour from SeeJaneInvest. Trumpbour saw a key parallel to jump-start her own investing:

Before becoming an investor, I was very familiar with nonprofits and charitable giving. Angel investing is a wonderful hybrid of philanthropy and personal finance. As risky as it is, I’m always giving an entrepreneur a wonderful education, and I wouldn’t be betting on her if I didn’t think she could return a profit to me. If I would be comfortable giving money away, why not expect to see a return on it? If it means I’m helping more women compete as startup leaders and influence the market, and potentially growing my personal assets, I’m all for it.

In an email, prolific NYC-based angel investor Joanne Wilson echoes that sentiment, saying: “Investing is always a risk. Sometimes you pick the right one and others times you don’t. The best rewards are seeing the entrepreneurs that you invest in have success and move their companies forward. There is nothing else like it.“

Wilson points to the deep pockets of women as a potential source of capital, adding “45 percent of the millionaires in the U.S. are women. If each of them would take an amount of money and set it aside to invest in a women entrepreneur, the difference we would see in job creation would be significant.”

Investing money is like having sex. But getting involved in the companies is like raising children. Esther Dyson

Esther Dyson, a trailblazing tech-journalist-turned-angel-investor who started deploying capital in the 1980s, told me in an email that she sees investing as a powerful activity for women.

“As an angel investor, investing your own money, you don’t owe anything to anyone,” she said. “It’s really not that scary as long as you don’t count on success. What’s scary is investing other people’s money — because then you are responsible to other people and you need to apologize for your mistakes.”

Fear of losing money is a common reason to avoid investing, and Dyson warns against it.

“It’s easy to lose all your money, and you need to be prepared for that,” she said. “The best way not to lose all your money is to start with enough of it to diversify your investments. And ideally, you’ll have enough time to contribute more than just money, and therefore you can help your investments to be successful, rather than just pick ones that will be successful without you. Overall, investing money is like having sex. But getting involved in the companies is like raising children.”

Trumpbour encourages women to rely on their practical expertise when it comes to choosing good deals.

“Companies have been interested in my relationship to money since I was toddler because of my perceived purchasing power. I rely on my consumer expertise all the time. If I wouldn’t buy a company’s product or recommend it to a friend, there is no reason for me to invest.“

The stereotypical investor invests in what and who they know, but for the current wave of angels, it is often another man. The wave of women entering the angel investing space opens the door for a new kind of knowledge and a far more diverse group of companies to go on to raise venture capital and mint millionaires upon exit or IPO.

Countless studies have shown that the tech world’s focus on pattern-matching is shorthand for bias toward people who look like us. Expanding the pool of angel investors to include people who look different expands the pool of who is funded and succeeds. Female angels are leading that charge.

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