I’ve always been hesitant to identify myself as a “female” entrepreneur or angel investor and I’ve never gravitated toward women’s groups. There are a lot of reasons why, but it’s mostly because I’ve been afraid of marginalizing myself as a business person by doing so. Despite this however, I am a co-founder in MergeLane, an accelerator for women-led businesses, and I’ve decided to make a major shift in my life to focus on investing in women. I’m often asked why I made this shift and I thought it might be helpful to share:
Why was I hesitant to focus on women?
As a member of the millennial generation, I grew up believing I would have every opportunity my brother would have and for the most part that has been true.
I enjoy working with men. I think they bring a different and balancing perspective, with a sometimes more intellectual rather than emotional approach than I bring.
Although I have experienced gender discrimination, it has either been minor and unintentional, or from people that I would prefer not to work with anyway.
Being a woman has absolutely worked to my advantage. As one of the few female angel investors, I stand out. Curiosity makes people want to talk to me and remember me.
Seeking extra support and “empowerment” because I’m a woman makes me feel weak and marginalized. I prefer to believe that I’m strong enough to stand on my own two feet. If I seek additional support, it’s like I’m admitting that I’m somehow less capable than my male counterparts. (Read my previous thoughts on this here.)
Although there are certainly far fewer women applying for angel funding, the quality ratio is, from my experience, much higher. I screened several hundred deals last year and would estimate that only 10% of them were led or co-founded by women. However, of the 10 investments I made, four of them are led by female CEOs (Erika Trautman, Karen Bradley, Willow King, Sherisse Hawkins) and one was co-founded by a woman (Kati Bicknell). This is not because I was trying to support women, it’s simply because these five companies rose to the top.
This investment ratio is far different from that of similar groups and funds I’m involved with. I’m a member of two other angel groups and a limited partner in two funds that have a pretty comparable applicant pool and they didn’t invest in a single female CEO last year.
26% of the 53 Impact Angel Group members were women (4% higher than the national average of 22% in 2014, up from 13% in 2012). However, 50% of the members that were obtained through marketing efforts, rather than referrals or previous relationships, were women. This was not intentional and we did nothing to specifically target women.
Many of the startups and investors I work with want to hire and invest in high-level startup women, but they report that they can’t find them – especially in tech.
Why did I take the jump to commit to invest in women?
I think investing in women is a great investment thesis. Statistically, venture-backed women-led businesses achieve 12% higher revenue. Additionally, while there are very few women looking for angel capital, the ones that are, seem to have their ducks in a row. This could make finding the diamond deals much more time efficient. I do understand the selection bias here and the fact that over time this gap may level out as a result of correcting for it. As of today however, I think the investment rationale is sound.
Investing in women might just be the best way to make an impact. Based on the research, investing in women will have a more efficient impact on our economy. Furthermore, since women are more likely to start social enterprises (more than 90% of companies that focus on tackling social problems have at least one woman on their leadership team), investing in women will also have a more efficient impact on society.
Highlighting and cultivating female angel investors are important female recruiting tools. I am guessing that I’ve invested in more women and with more women, simply because I am a woman. My visibility in the startup community helps women realize that they could be angel investors and I think female entrepreneurs are more comfortable approaching me.
While the gender gap may not be intentional, it’s there. Regardless of why the gap exists, there is clearly a lack of women in the investment funnel and startup talent pool. It took me a while, but I finally realized it was time to get real about it and start doing something.
This is why I decided to join my co-founder Sue Heilbronner to start MergeLane and why we’re going to invest in women until the need or thesis for doing so is obsolete. Research suggests that we’ll make better returns and more of an impact, and since we’re women who can be impactful by example, it’s been a no-brainer.
I've spent more time than necessary on our fund administration and reporting, in part because of some of the easily avoidable administrative mistakes I’ve made over my 10-year journey as a startup investor.
Over these past two months and throughout all of 2020, I've learned something that I want to record to make sure that I remember: My anxiety about the potential outcomes is almost always worse than the actual outcome.
In this episode, Beezer shares how the pandemic is affecting Sapphire Partners’ investment strategy. I also share what I’ve been seeing from investing in startups and venture capital funds through our MergeLane fund.