Live Free and Start knows that a successful startup ecosystem and strong business climate require many things, but access to capital is one of the most critical components. As part of our efforts, we are actively working to increase the number of angel investors statewide because angel investing is critical to entrepreneurship and entrepreneurship is critical to economic development and job creation.
Over the last year, Live Free and Start has noticed many signs of an appetite for boosting the number of women investors in New Hampshire in particular.
We know from UNH’s Center for Venture Research 2015 Angel Market Analysis that women angels represent 25.3% of the angel market. We have anecdotal evidence that suggests women angels represent a significantly smaller percentage of angel investors in New Hampshire.
In an attempt to create a more diverse group of angel investors in the state, we established a working group to test the level of interest of women investors statewide. We had an overwhelmingly positive response to outreach efforts and as a result, we hosted New Hampshire’s first gathering, focused on women angel investors. The event included a panel discussion moderated by Liz Gray, the State’s Director of Entrepreneurship, who leads the Live Free and Start initiative. We brought in three outstanding panelists: Sandra Stone Chair Emeritus of Maine Angels; Alison Pyott, Partner at Veris Wealth Partners and Treasurer of New Hampshire Women’s Fund is an expert in Gender Lens Investing; and Becky Stoughton Vice President of Fuentek and an entrepreneur actively looking into angel investing opportunities. They each shared their experiences and practical knowledge, offering the attendees a brief yet valuable framing of angel investing.
The panel shared staggering data points that make a good case for balancing out the number of women in the entrepreneurship and investor community. In April McKinsey released a paper The Power of Parity: Advancing Women’s Equality in the United States. Based on their research, if the US bridged the gender gap it would create an additional $4.3 trillion in GDP. Globally, they estimate a $12 trillion increase in GDP. In NH they estimate an 8% increase in GDP. And in the US women receive approximately 4% of venture capital. One reason for this imbalance is crystal clear: only 4% of investing VC’s are women, and this creates further disincentive for women to show up and pitch, shared by Jules Pieri from The Grommet.
Attendees confirmed some of the common barriers women encounter when beginning their process of becoming an investor. Women experience a calculable confidence gap, keeping them from taking the first step toward angel investing event or attending an event on the topic. Cultural bias inhibits women from returning to those events to become an active investor. Women tend to lack networks that connect them to private investment opportunities or entrepreneurs of interest to invest in. Some women are risk averse and simply don’t want to put family resources at risk. And many women are more comfortable to donate philanthropically because the dollars are “known.”
The panelists brought the focus back to general best practices and fundamentals for prospective investors:
- Consider angel investing as an alternative to some of your philanthropic commitments. Philanthropy is 100% risk capital with no financial return except tax deduction. There are opportunities to match your passion with a company supporting the missions and change you want to see in the world.
- Take advantage of the many resources available online, through angel groups, books, blogs, etc. to learn about angel investing.
- Attend angel group meetings to see what actually happens and decide which group has the right focus and is the best fit for you.
- Know that diverse groups make better decisions
- Consider investing in a wide range of deal sizes. By investing in 8-15 companies you spread risk and increase likelihood for a return on your portfolio
Live Free and Start is excited to continue supporting the women that attended our first event and others as they explore opportunities with angel investing and determine if it’s right for their investment portfolio. We plan to respond to the attendees’ requests for continued education, networking, and mentorship opportunities. If you’re interested in receiving information specific to our women angel investor outreach efforts, CLICK HERE to sign up for updates.