The stats for women in investing are somewhat bleak. Only 11% of VC partners are women, and as a whole, women angel investors have only reached 22%. On the entrepreneur side, things look better, with over 40% being women. However, things are starting to look up even more. According to the Angel Capital Association (ACA), there has been a big increase in women who are members just in the last few years. Female membership in ACA was at about 11% in 2016, and now five years later, the membership in ACA is closer to 25%, according to Sarah Dickey, membership director for the Angel Capital Association.
One reason there are now more women angel investors is because they have access to resources. Women currently control around 60% of the nation’s wealth and direct 83% of all consumption in the U.S, but despite that economic power, historically, women invested 40% less money than men. These numbers are only going to get bigger. In addition, as women control more and more money, they are learning about additional asset classes so that they can balance their portfolio. Alternatives such as angel investing, hedge funds and real estate are all more accessible to women than they were even a decade ago.
In 2015, the Bank of Montreal’s Wealth Institute said that “Women currently control 51 percent, or $14 trillion, of personal wealth in the U.S. and are expected to control $22 trillion by 2020.” Additionally, they expected women to control about $22 trillion by 2020. According to McKinsey and Company, “By 2030, American women are expected to control much of the $30 trillion in financial assets that baby boomers will possess—a potential wealth transfer of such magnitude that it approaches the annual GDP of the United States.”
Considering the emergence of these funds nationwide, entrepreneurs still want to know how they can get an opportunity to get in front of women angel investors. Here are six tips to help you get started:
- Research exhaustively: The No. 1 suggestion for getting in front of any fund is to do your research. Make sure you are pitching to a fund that is appropriate for where your business is right now. Next Act Fund, for example, only invests in “early stage” companies, which it classifies as being in the production or beta stage and having generated some revenue. Pre-revenue companies who only have a concept or an idea are not a good fit.
- Sweat the details: It is crucial to pay attention to the details since women-focused funds are becoming more and more prevalent. There is starting to become a “network effect” among the women-focused funds, where people share stories about the good, the bad and the ugly. While this could spell trouble for those who are not conducting their own diligence in researching investors, it can be a huge boon to those who impress investors and then can tap into their network.
- If you’re in femtech, start with women: For some women who have a product or service focused on women’s health or hygiene, getting in front of the female-focused funds is essential, especially early on. One can imagine how hard it is to pitch femtech to an audience that does not experience menstruation or menopause. Many NAF angel investors have sat in on meetings where they are the only woman in the room and the only one who understood the possibilities for the company. While you may want to focus on women-led funds for early rounds, rest assured once a company becomes hot, even the male-oriented funds will take notice.
- Don’t stress about location: Thankfully, location has become almost a non-issue. If the last 15 months have taught us anything, it is that this world has become completely virtual for both entrepreneurs and investors. Do not hesitate to pitch a fund that is in a location you know nothing about. For example, Next Act Fund is in Pittsburgh, but most investments are located outside the region, and almost all meetings are held via Zoom. While connecting with your local fund is a great first step, check out funds located in an all areas of the country.
- Warm intros aren’t what they used to be: With respect to getting that coveted “warm intro,” which might make your pitch deck stand out, social media makes that much easier since you can often connect or DM a partner or angel directly. However, many investors also respond to cold emails, and that is still a great way to reach out to people.
- Be responsive: If an investor must chase you for promised info, they are likely going to sour on the company quickly. Next Act Fund gets way more applicants than they can invest in, so promptness in conveying information is certainly appreciated.
The cycle of getting your company funded and growing while successfully completing an exit is a hard one. However, some of the best investors were once operators, so if you get to that point, maybe you could join the surging group of women angel investors yourself!
Originally published Sept. 2, 2021.
