Angels Close the Gender Gap

By | 2016-12-01T19:13:52+00:00 June 9th, 2015|Startup Culture|

Look out world! The number of female founders of businesses is on the rise. In 2014, more than one in four angel-backed companies in the United States were started by women, according to the Center for Venture Research. That’s a substantial 44% increase over the prior year.

These numbers may surprise you, given the hubbub in the media about the shrinking number of female partners in venture capital and its impact on financing women-led companies. But we are talking angels here, not VCs. In the past 10 years the number of women angel investors has exploded—increasing 318%. More than one in four angels are now women.

“Women want to use their financial muscle to advance women,” Andrea turner Moffitt said. Moffitt is the author of Harness the Power of the Purse: Winning Women Investors. Women are the world’s fastest-growing segment of wealth creators and controllers. They control 39% of investable assets in the United States.

“People invest in what they know, from a personal and business perspective,” said Kay Koplovitz, chairman and cofounder of Springboard Enterprises, an accelerator for women-led businesses in technology, media and life sciences. It’s no surprise that with the growing number of women angel investors, an increasing number of female founders are getting funded.

Before you rejoice, remember that as hard as it is to raise seed and startup capital, it’s even harder for any company—not just those that are women-led—to raise its first institutional round, which has come to be known as the valley of death.

Since there are so few venture capital partners that are women,women-led companies find it much harder to cross that valley than their male counterparts. “When you peel back the numbers, female founders are raising at half the rate of their male counterparts,” said  Kay Koplovitz, chairman and cofounder of Springboard Enterprises, an accelerator for women-led businesses in technology, media and life sciences.

Jennifer Fonstadt and Theresia Gouw, the founders Aspect Ventures, just raised $150 million for their initial fund, which is aimed at bridging the gap between seed and later stage investments. Koplovitz is also raising money for the Springboard Fund, which is also aimed at bridging the gap for companies that have or could have gone through its accelerator program.

Rather than complain, the women of #choosepossibility, a movement of  women tech entrepreneurs, led by Sukhinder Singh Cassidy, founder and chairman of Joyous, are sharing data about what it takes to succeed. For the most part, media are ignoring their stories, which is a loss both for the women and for investors who want a good return on their investments.
To the guys running VC firms: Get with it! Expand your investment options by investing in more women-led companies—even taking on a woman partner to make sure you understand those options.

 

Geri Stengel is president of Ventureneer, a marketing research company targeting small business. Geri is a regular Forbes contributor, consultant, Kauffman facilitator and the author of Forget the Glass Ceiling: Building Your Business Without One.