Women Angel Investors: A Movement That Has Taken Off

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Back in 2004, when Golden Seeds started, only 5% of angel investors were women, according to the Center of Venture Research at the Peter T. Paul College of Business and Economics at the University of New Hampshire.

“Stephanie Newby got this idea that we needed to start a movement to get capital to fund female founders,” said Loretta McCarthy, co-CEO and managing partner at Golden Seeds. Newby founded Golden Seeds. “It [women funding women] has become a movement in many ways.” Since then, many others have been inspired to start angel groups focused on funding female founders.

The percentage of women angels grew to 33.6% in 2021.

According to two reports by the Angel Capital Association, having a growing number of women angel investors is significant.

  • Female investors are dramatically more likely to consider the gender of the founders they are considering investing in startups. More than half—51%—of women feel the founders’ gender to be highly important, compared to 6% of male investors, according to The American Angel. While female investors are more likely to admit they consider gender, the reality is men do, too but in a much more subtle way. This shows itself in the type of questions male investors ask female founders compared to male founders. Women are asked about mitigating risk, while men are asked about exploiting growth.
  • Over the last 15 years, angel-backed companies with women CEOs have quadrupled from 5% in 2015 to 21% in 2018, according to the 2019 ACA Angel Funders Report.

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Most angel groups are local. But 10 years ago, Golden Seeds decided to become national, and it now has eight chapters. “Our mission is to fund high-quality female founders and not female founders in our local neighborhood,” said Jo Ann Corkran, co-CEO and managing partner at Golden Seeds.

“We’re not just waiting for stuff to come over the transom,” said Corkran. Members in each chapter proactively engage with incubators, accelerators, college entrepreneurship programs, and business-plan competitions. Golden Seeds holds office hours once a month, providing feedback to female founders on their startups, answering questions about what angels and VCs look for in an investment, and directing them to additional resources.

“Awareness of our brand has really improved over the years to the point where, in the last five or six years, we have entrepreneurs and, frequently, serial entrepreneurs coming to us because they want to have women on their cap table,” said Corkran. Dr. Christina Lampe-Onnerud, founder and CEO of Cadenza Innovation, is an example of this. The company is the fifth largest manufacturer of batteries.

The SEC defines accredited investors as individuals who can invest unlimited money in startups. Don’t Quit Your Day Job (DQYDJ) estimates that there were 13,665,475 accredited investor households in America in 2020. Only a minuscule percentage of accredited investors are female angel investors or limited partners in venture capital funds. So there’s plenty of room for Golden Seeds and the other angel groups that cater to women to grow.

Few women (and, for that matter, men) have the expertise to invest in startups. “We knew that we were attracting some really interesting members with substantial backgrounds, but very few of them had worked with startups,” said McCarthy. “So, early on, we started the Knowledge Institute, which provides courses. We have taught these courses in about 20 countries around the world.”

Corkran’s ex-husband, an entrepreneur, constantly had people coming to him and asking him to invest in their early-stage business and give them advice. She was a senior manager at a large investment bank. “Not once did somebody ever come to me and ask me if I wanted to put money in their business,” she said. Fortunately, she met Newby at an ex-Wall Street women’s lunch and was invited to a Golden Seeds meeting. “I walked in and saw people I knew from the Street,” she said. “I started attending meetings and was fascinated by the companies that women were starting.” The rest, as they say, is history.

McCarthy had quite a long history of championing women’s causes in both the finance and nonprofit sectors. She cared deeply about equity and fairness for women. She had worked in the investment sector, including being the chief marketing officer at Oppenheimer Funds. Her experience included working with women investors and families, encouraging them to get more involved with investment decisions. Newby had heard that McCarthy was already investing in startups and approached her. “Joining Golden Seeds was a good fit for my interests and skills,” she said.

Over the 18 years Golden Seeds has been investing in female founders; they have seen a change in the investors joining. Women not only now have the capital to invest, but they also have the interest, skills, and connections to support early-stage female founders. Very few members inherited their wealth, and most of their members have made their fortunes.

Early on, members made their wealth in big corporations. That’s changing. Younger people are more likely to have made their wealth by working at startups. They enjoy staying current on emerging trends. It is part of Golden Seeds’ mission to include men. Close to 20% of its members are men.

But women angels alone can’t change the fact that only a tiny percentage of venture dollars goes to female founders. According to PitchBook, startups with at least one female founder received 17% of venture capital for the first half of 2022. Startups founded solely by women raised 2% of venture capital. It’s hard to believe that in an age when people know the benefits of investing in diversity, 83% of VC funds go to all-male founded startups.

In 2011, Corkran was asked to help launch a venture fund. Golden Seeds now has three funds. In the last few years, there has been a surge in the number of funds started by women.

How will you invest in female founders?