Yes, it’s been a little quiet here of late. Turner Hopkins has been on holiday. But we’re back and at it! Here’s a cross-posting from our sister site, Angel Academe.
The thorny issue I was actually mulling over on my way home from the National Investment Summit on Wednesday was whether increasing the number of women entrepreneurs is the best way to increase the number of women angel investors, or if it’s the other way round. That is, by increasing the number of women angel investors, more women entrepreneurs get funded and you encourage more women entrepreneurs.
Of course it’s both. More women angels will encourage more women entrepreneurs and more will get funded. They then may go on to become angel investors themselves. Obviously it’s a little more complicated than this, but you get the picture. It’s a virtuous cycle thing.
I’d just been speaking on a panel session at UK Business Angels Association’s annual event to discuss all things relating to angel investing and entrepreneurship and recognise the best investments of the year. See here for the winners.
Alongside me on the panel was Jo Anne Miller from Golden Seeds in the US and Bev Hurley CEO of YTKO and angel investor. We were very capably moderated by Modwenna Rees-Mogg, founder of AngelNews. The topic we were discussing, as you may have guessed by now, is how to attract more women into angel investing.
And it’s a pretty hot topic. Angel funding is the biggest source of risk capital for startup and early stage businesses in the UK. Over £50m is invested by angels annually. According to UKBAA figures, we women only represent 5% of angel investors, although we control a very healthy proportion of the net wealth in this country, so just imagine what could be achieved if we could tap into the resources of more high net worth (HNW) women?
How best to go about it is an important subject therefore. Do we focus our scarce resource on encouraging more women to take up entrepreneurship with the expectation that, if they become successful, they reinvest some of their fortune? Yes, absolutely. Experienced entrepreneurs know what’s involved in starting and growing new businesses and have an appetite for risk. But it could take years to achieve this in sufficient numbers. In the meantime, should we use some of that scarce resource to encourage more HNW women (entrepreneurs or not) to become angel investors? Again, yes! The evidence is that when more women invest, more women get funded. I would argue that focusing on this side of the equation gives us more bangs for our buck and much faster.
So, back to my original question: do you need to be an entrepreneur to be an angel investor? I’m meeting smart and savvy angels all the time who come from advertising, the City and professional services who are adding huge amounts of value to their investments. I would argue that being entrepreneurial is much more important than being an entrepreneur. That far from bringing dumb money, HNWs with corporate backgrounds bring vital skills, experience and contacts – not least back into a valuable corporate customer base.
But maybe being an angel investor makes us entrepreneurs after all? As Prof Rob Wiltbank clearly articulated in his presentation: angel investing IS entrepreneurship, rather than a financial class.
With Angel Academe, I’m working hard to create a group with a wide mix of skills and experience. From entrepreneurs through to senior professionals, technologists, experienced angels and people just starting out. Each brings a different, but equally important, perspective and everyone is invited, although not pressured, to give an opinion and contribute. The group is designed specifically to appeal to women, although men are very welcome and do attend, and while we’re clearly focused on funding the very best deals to maximise financial return, we like to support female entrepreneurs whenever we can.
Before I sign off, I’d like to thank the UK Business Angels Association for an excellent event and the opportunity to debate a subject that’s very close to my heart with such a good group of people. Hopefully by next year, we’ll have changed the ratio for the better!