Women have a powerful tool for helping other women get into positions of power in corporations: their money.
I’m not talking about putting your money into Fortune 500 companies. I’m talking about putting your money into companies that will become the job creators in the new economy. Yes, ladies, your money could be the fuel that fires up a start-up company or grows a company big. The chances for a company’s success increase the higher percentage of women on the management team, according to research conducted by Dow Jones.
If you’re wealthy enough to be an accredited investor, angel investing in women-led companies may be financially savvy and help build a ladder to the c-suite for women.
More women are doing it
While only 12 percent of angels were women in 2011, the number is on the rise. “All arrows seem to be pointing up,” according to Jeffrey E. Sohl, Director, Center for Venture Research. “Women are joining existing initiatives, [such as Golden Seeds, an angel network that funds women entrepreneurs]. Women angels are doing deals and new initiatives, [such as Pipeline Fellowship], are taking hold.”
Angel investing takes hard work and skill. Fear not if you don’t have the skill. You can learn it. Pipeline Fellowship has a training program in which you’re taught, mentored, and actually invest in both a women-led and socially responsible company. “The program makes risk-averse women risk astute,” said Natalia Oberti Noguera, Founder & CEO of Pipeline Fellowship.
Is angel investing for you?
If I’ve piqued your interest and you want to know if angel investing is right for you, here are some questions Susan Preston, of the Angel Resource Institute and Clean Energy Angel Fund, suggested you ask yourself when she spoke at the Pipeline Conference on angel investing.
The first questions to ask are financial:
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Do you have the income (an annual salary of at least $200,000) or the assets (a net worth of at least $1 million, excluding your home) to be an angel investor?
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Can you afford to lose your investment without it impacting your lifestyle?
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Do you have money to do multiple deals? Success in angel investing is based on the law of averages. No single investment is a guaranteed winner but by investing in 10 to 12 companies over the course of 5 years, odds are that you’ll get a winner.
The second set of questions relate to commitment.
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Do you have the 40 to 50 hours per company needed to do the due diligence? Even if you share the analysis work with other angels, you still must spend time to analyze every potential investment. Statistics have shown that the more time you spend on the analysis, the more likely you’ll have a good return on your investment.
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Are you willing to give more than money to the company in which you invest? It may be that your expertise and connections are even more valuable for the up-and-coming entrepreneur? This is an important additional value angels can add.
Lastly, ask yourself about your motivation.
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Do you want a return on investment? If you don’t, make a donation to a nonprofit instead.
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Do you want to be useful in a variety of ways? Mentoring, advising, and connecting entrepreneurs can accelerate the target company’s development.
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Do you want to give back to the community? Angels play an important role in funding high potential start-up companies. Products created by the entrepreneur, especially by social entrepreneurs, can make a difference in the quality of people’s lives.
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Do you like the entrepreneur and want to see her succeed?
Women entrepreneurs and executives may have different motives as to why they’re trying on angel wings but, ultimately, they want to help women-led companies soar.
“I‘ve always shared my knowledge and connections with the next generation of women entrepreneurs,” said Atieno “Ati” Okelo Williams, DC Home Buzz, a real estate brokerage firm located in Washington, D.C. “Pipeline Fellowship allows me to take my support to the next level by also providing money. Providing money is also a way to diversify my [investment] portfolio and provide an additional stream of income.” Williams’s reasons are typical of entrepreneurs who become angel investors.
“I have advised sovereign governments for their long-term economic development, but there is just something deeply satisfying and exciting about investing personally in entrepreneurs that do good, and possibly seeing rapid impact in your lifetime,” said Virginie Henry, strategy consulting manager at Monitor Deloitte.
“The Pipeline Conference did a great job at demystifying angel investing for women who haven’t yet put their money on the line,” she continued. Henry expresses frequently voiced reasons that corporate executives give for getting involved in becoming angel investors in women-led companies.
What’s holding you back from investing in women entrepreneurs?