Mergelane Blog

Broadening the On-ramp for Women-run Companies

Why I’m Investing in More Women

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:

‍Photo by Tech Ed Live

Why was I hesitant to focus on women?

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.)

Why did I start to shift?

In my previous role as the founder of the Impact Angel Group (now part of Investors’ Circle), I became increasingly aware of four things:

  1. 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 TrautmanKaren BradleyWillow KingSherisse 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.
  2. 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.
  3. 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.
  4. 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?

  1. 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.
  2. 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.
  3. 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.
  4. 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.

Related Posts

Why My Day in the Woods Was My Most Productive Work Day Yet

I am extremely disciplined and focused. However, this can also be a detriment. Anything I perceive as a distraction from my to-do list feels stressful, and I have to constantly tell myself that off-the-to-do-list opportunities are often the best opportunities. I was recently reminded of that.

Read more ➞

Episode #10: Lessons from 300+ Venture Capital Fund Pitches

For the final episode of Fund81's first season, I interviewed Jaclyn Freeman Hester from Foundry Group. As someone relatively new to the industry, she has a fresh perspective on what's compelling to institutional investors and an incredible pulse on the landscape for emerging VC managers. Enjoy!

Read more ➞

Shedding My Commitment to the Conventional Schedule

Could I be more effective if I simply surrendered to a schedule that felt natural to me? After some serious self-reflection and experimentation, I can unequivocally say YES.

Read more ➞

How I'm Doing Less to Achieve More

I’m trying to focus my time on opportunities to operate in my zone of genius and a few select priority areas in line with my passions and in which I feel I can make the most impact, aka my true north. To help all of us stay the course, I thought it might be helpful to share those priorities. ‍

Read more ➞

When Giving First Gets to Be Too Much

I gave first without question for almost five years. It came back to me in spades. I don’t regret it, and I think it was exactly the right thing for me to do at the time. But then….it just got to be too much.

Read more ➞

Episode #9 - Cryptocurrency Venture Investing: The Questions Every VC Should Ask Before Making a Crypto Investment

Dave Balter, the CEO of one of our MergeLane portfolio companies, Flipside Crypto, shares his perspective on investing in the cryptocurrency space. Dave is obsessed with and extremely knowledgeable about cryptocurrency, and has an interesting perspective from both sides of the table.

Read more ➞

Episode #8: Why Ownership Matters in Venture Investing with FirstMark's Amish Jani

Most venture capital funds target a minimum ownership percentage when making investments. In this Fund81 episode, Amish Jani, a founder and Managing Director of FirstMark Capital, shares his take on why ownership matters and how funds of different sizes and strategies determine ownership targets.

Read more ➞

Episode #7: Venture Capital Liquidity: Innovative Solutions for Today and the Future

Venture capital funds are typically structured to have a 10-year lifespan, but venture-backed companies often take more than 10 years to achieve an exit and return capital to their investors. In this Fund81 podcast episode, we discuss solutions to this problem with our our guest, Roland Reynolds.

Read more ➞

How 75 Ski Days Made Me a Better Venture Capitalist

This year, I decided to do an experiment. To build our MergeLane investor and mentor network, I dedicated four months to exclusively focus on meetings that involved skiing.

Read more ➞

Episode #6: Using Conscious Leadership to Be a Better VC

Conscious Leadership has been a game-changer for our partnership and our investing. For this Fund81 podcast interview, I invited my business partner at the MergeLane venture fund for high-potential startups with at least one woman in leadership, Sue Heilbronner, to talk about Conscious Leadership.

Read more ➞