For International Women’s Day this year, I thought I’d explain a little more about Angel investing following my interview in The Sunday Times last week.
Many of you have asked why I invest as an Angel and how it all began. Here is my story — I hope you enjoy.
I first met Sarah Turner, Co-Founder of Angel Academe, 3 years ago through a mutual friend.
We met at a lunch where I sat with 7 other females — all entrepreneurs. My background was always in large corporates.
Apart from being in awe of the entrepreneurship around the table — I quickly became interested in the inequalities of investment.
Sarah began to explain — starting with individual investor stats.
The story back then was similar to now — investments were predominantly made by males, to males.
Surprisingly whilst women may have over 52% of the world wealth, we are not the ones investing it.
Certainly when it comes to investment, even smart and successfull women are less confident.
YouGov — highlighted some key differences in 2018:
Even though 45% of women believe investing is a good strategy, the final bullet really highlights the confidence difference between men and women in diversifying their investments.
According to the UK British Angels Association, the UKBAA, only 14% of Angel investors are women. (Note: The UKBAA are issuing new data on this for IWD — so I’ll update once this is issued).
Many entrepreneurs who come to Angel Academe for funding have NEVERmet a female investor.
Angel investing is a crucial part of the start-up community. Start-ups in the early days need Angel investing to get their products and businesses off the ground. Institutional money, or VC, tends to come later.
Without the £2bn of Angel investing in the UK every year, many start-ups just wouldn’t survive.
Back to my story, Sarah and I became quickly engrossed in the disparity and started to talk about my own investments.
A relatively safe haven for investments.
Sarah — ‘Have you considered Angel investing?’
Me — ‘No, I didn’t know anything about it’.
My own experience of Angel investing was Dragon’s Den, which is not the real world. So I joined the Angel Academe network to get some more information.
Angel Academe is focused on education for women to empower us to make more diversified decisions about our investments.
It’s not an exclusive female network, however it is predominantly female.
I attended a couple of free education events the network run on understanding pitches, a session on legals, on tax and a longer session on how you might choose a suitable investment.
Angel Academe have a network of over 400 registered Angels in the UK, who are mostly women. The Angels gather at regular pitch events throughout the year where circa 20 companies pitch from over 500 applications received and screened by the Angel Academe team, ably assisted by some of the investors.
With so many Angels, the mentoring opportunity is vast. If I didn’t understand, I just asked for help. Most of the Angels were, and are, serial investors, with large portfolios. There isn’t much they haven’t seen before.
So, armed with the basics, I started to develop a network of mentors to help fill my gaps in knowledge.
I was a member for a whole year before I made my first investment.
So why did it take a year to make my first investment? Two reasons I’d say:
1) My confidence in ‘picking a good one’
2) Seeing a business which I understood and could relate too
My first investment was in EnterpriseAlumni.
As a tech executive, working for SAP, it was easy to see the potential for a software business with big blue-chip customers as references.
I was very intrigued by the business.
How could a 13-person business have convinced SAP to resell their products?
How had they sold to Nestle and Pearson as a tiny provider?
So, I started to dig around.
Working with the other Angels we performed a few weeks of due diligence on the business and legals, we completed the deal and I became an Angel for the first time.
One of the benefits of a network like Angel Academe is everyone helps with the due diligence.
Each Angel plays a part in the due diligence, every Angel using their own experience to help. Whether that’s patent checking, legals, market experience etc.
You don’t have to be an expert in everything — but the cohort collectively knows most things. Over time you broaden your experience, by using the experience of the network.
Whilst the decision to invest is yours alone — there is plenty of help as needed.
It’s worth saying also — there is no pressure or judgement to invest. If you start the due diligence and then if you decide it’s not for you — that’s ok too.
Once I had made that investment, it was then easy to start looking at other sectors, with my experience gap filled with my fellow Angels.
Angel Academe was also attractive because of the types of start-ups you meet and have an opportunity to work with. At Angel Academe, all start-ups must have at least one female founder.
According to the Beauhurst report from Dec 2019, the amount of equity given to a company with one female founder is 22%, but only 9% of the money invested goes to those businesses.
And other sources say the same — according to data from the US [Source: Crunchbase]….
That’s 89% goes to all-male founding teams.
Whilst 3% for all female teams is low, this is mostly representative of tech start-ups where there isn’t the pipeline of all female teams.
The biggest loser is the mixed teams at only 8% — the pipeline is there but something is awry.
With regards to VCs investing, you’ll be unsurprised to learn that in the US only 30% of VCs are female and only 13% of those are in a decision-making position.
In the UK, 83% of VC firms have no women at all.
Also, when a mixed or female founded team get to pitch point — they are asked ‘prevention’ questions vs their male counterparts being asked ‘promotion’ questions.
Male: How will you monetise your solution? (Blue sky)
Female: When will you make profit? (Specific)
Without diverse investor groups — how can we possibly address the inequality of the investment made?
Why should the VCs care about diversity?
A study by Boston Consulting Group in March 2019 that is you compare revenue generated by different types teams for every dollar of investment on average revenue generated for female teams was 78 cents vs 31 cents in male only teams.
The smart VCs will start to get with the program. But it will take time.
In the meantime, Angel Academe is helping to adjust this balance. It’s rewarding to be part of that industry change.
Seeing the ambitions of the diverse teams we see through Angel Academe — the Angels feel part of making the change for good.
Whilst mixed and female teams are just as focused on profit as the all male entrepreneurs, many are developing impact businesses — which are really trying to change the world.
Since my first investment — I have now invested in an identity & privacy business, a vegan drinks company, 2 x NHS game changers and I’ve started to look at climate change investments.
All profitable, investable businesses with good prospects of returns.
We can help ensure that diverse teams ‘are heard’ and receive investment/support they deserve.
Angel investing is a way to make smart investments — in a responsible way - for all our futures.
Angel investing isn’t for everyone. Like any investment, it’s financially regulated because like all investments, it carries risk.
That said, I have benefited greatly from working with the team.
Not only do I now have a diverse portfolio of investments, I am helping small companies grow and helping to make a more positive impact in the world.
I’ve expanded by knowledge of business, commerce, finance, legal and in industries I would have never imagined I would know something about.
So, on International Women’s Day — here is a virtual ‘toast’ to Angel Academe and all their Angels — helping to empower women on investing and giving a leg-up to all those companies looking to change the world.