Angel Investing and the Sexes ♂♀
Startups: An "Alpha Male Pissing-Contest?"➀ makes a great opening line for this post which discusses why more ♀ angels are good for all investors. First some stats, then compelling arguments in favour of diversity, followed by an intro to five of the many sterling ♀ angel investors in New Zealand, for completeness sake, the ten source articles, and finally, for a humorous close, in contrast two different promo videos for ♀ angels.
The Data 📊
Good angel investors bring smart money, meaning cash and brains. Money is often the easy bit, diversity of mind is much harder to achieve but is ultimately what produces the better results. I am the chief cat herder 📽 of New Zealand's foremost active angel group, the Flying Kiwi Angels, and would love to see more women in our group to achieve better results through more diversity.
Ratio: Women to Men
Sadly, in NZ we had only about 5% women among all angel investors in 2012➃, whilst the US were doing somewhat better with about 26% women in 2014➉. The graph below is based on AngelList data and shows that everywhere across the globe women are representing less than 10% of all angel investors, despite stronger ♀ angel growth in recent years. In North America, over the 10 years to 2014➉ women numbers have been catching up, the growth rate for ♂ angels was 13% and a whopping 318% for ♀ angels.
When FKA formed in 2014 we had three formidable women amongst our first dozen. Unfortunately, since then that ratio has deteriorated as we lost one of 'our' women to her MBA studies at Harward, and then had more males join the group. However, as we are coming to the end of our first 10 investments applicant numbers for the next round of 10 promise a better ratio. 👍
Ratio: Woman Angels to Woman Founders
Kapin argues that woman-led startups are more successful and laments that there are not enough ♀ angels to help more of them➀. The graph below shows that there is a strong correlation between ♀ angels and woman-led startups. Two explanations: more angels drive woman-led startups or this is simply the female flip side to the male homophily cited in Business Insider➁.
Stengel argues "Like it or not, the reality is that people are more likely to invest in people who are like them. It’s called homophily, said Robb. People of the same gender, race, and/or ethnic group tend to associate and bond with each other. Angels are more likely to invest in startups founded by entrepreneurs who are of the same gender, [...]"➈
Robb finds "Having more women on the funding side matters. The University of New Hampshire’s Jeffrey Sohl and Laura Hill conducted a fairly extensive survey of angel groups in the United States. They designated those groups with women representing at least 25% of their membership as “women-dominated.” They found that more than 30% of the firms presented for consideration in the women-dominated groups were owned by women compared to an average of 12% to 13% for male-dominated angel investor groups. Thus, as one would anticipate, angel groups with a higher representation of women tend to attract and consider a higher percentage of women-owned firms."➅
Stengel explains further: "[Since 2000] Super angel groups with venture funds, like Golden Seeds and Belle Capital, which invest solely in women-run companies, began forming. Other angel groups and venture funds also started up. These didn’t necessarily focus on investing in women-run companies but, because they are led by women, a high percentage of companies in which they invest are women-run. These include Boldcap Ventures, Illuminate Ventures and Broadway Angels. Formal angel training programs for women were begun by organizations like Pipeline Fellowship and 37 Angels."➉
More ♀ angels are good for all investors 📈
From the Harvard Business Review➂: "Fewer female angels mean fewer investors in general, which means less available capital to start companies. But to get more specific, the gender disparity in angel investing also creates a threefold problem for female entrepreneurs seeking money:"
Studies consistently show that female-friendly groups of angel investors are more collaborative, more likely to encourage newcomers, and more interested in a broad range of investment opportunities. ➂
In her Startups: An "Alpha Male Pissing-Contest?"➀ Kapin makes three interesting points.
Women make groups better➂: Malone: Before we did the research, we were afraid that collective intelligence would be just the average of all the individual IQs in a group. So we were surprised but intrigued to find that group intelligence had relatively little to do with individual intelligence. HBR: But gender does play a role? Malone: It’s a preliminary finding—and not a conventional one. The standard argument is that diversity is good and you should have both men and women in a group.
But so far, the data show, the more women, the better.
Woolley: We have early evidence that performance may flatten out at the extreme end—that there should be a little gender diversity rather than all women.
At FKA we get our best results when we pool our collective wisdom from a diverse group of individuals. Whenever women contribute to coaching, due diligence or post investment management the outcomes are better for it. Gender diversity is one very import piece in the overall diversity puzzle to improve the odds of angel investment returns.
At ArcAngels here in New Zealand ♀ angel investors empower, grow and profit by investing in woman-led startups. ArcAngels are definitely bringing more ♀ investors into to ecosystem which is a good thing. However, in a small country, the exclusive focus on women-led startups can distract from investor priorities. Also, investment club of only women may be suboptimal according to Woolley➂, who has early evidence that performance may flatten out at the extreme end—that there should be a little gender diversity rather than all women.
Rightfully I think, Granger goes for a much wider definition "diversity doesn’t just mean gender; race, geography, and socioeconomic background also factor into the equation".➄
Great Kiwi ♀ Angels 😇
Burnett has compiled a great list of over 150 early stage ♀ angel investors from North America➆. With a population of only 4.5M (30M 🐑), we have 40% fewer people in the whole of New Zealand than fellow chief cat herder John Huston in just his local State of Ohio. Therefore, I cannot match Burnett's list but I will give five examples of great Kiwi ♀ angels I know personally.
➤ Cecilia Tarrant co-founder of ArcAngels.
➤ Claudia Wyss co-founder of Flying Kiwi Angels.
➤ Dana McKenzie on the advisory board of Ice Angels.
➤ Maxine Simmons CEO of Cure Kids Ventures.
➤ Suse Reynolds director of NZ Angel Association and Angel HQ.
⑩ Source Articles
It is interesting that all 10 articles were written by women. Is this post, written by a man, therefore breaking a norm or an unwriting law?
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