Angel Insights Blog

By: Marianne Hudson, ACA Executive Director

Angel investors, we can do more to break down hurdles for women entrepreneurs. 

First, all of us at the Angel Capital Association should commit to zero tolerance for sexual harassment. Recently, two dozen women entrepreneurs spoke out for a story in The New York Times. I’m horrified that this issue still exists but grateful to these brave women for telling their stories. Let their bravery be the wakeup call to VCs and angel investors to end sexual harassment, one startup at a time. Addressing — and ending ― sexual harassment in tech startups is good for business, the women and men who work in this sector, and the angel investors who support them. 

Sexual harassment is one barrier. There are other extra hurdles women face in attracting capital for their businesses. Here are two paths to improvement:  

• Understanding our own unconscious biases toward women founders
• Adding more women to the angel investor community

Unconscious Bias and Changing Investor Questions

Academic research proves that both male and female investors analyze entrepreneurs differently by gender, leading to less money for women-led startups. 

Researchers from Columbia University and the Wharton School of Business showed how the deck is stacked against women in competing for equity funding, by both men and women investors. Janet Burns explains that the researchers reviewed footage of the TechCrunch Disrupt startup competition and found that “participants consistently faced different kinds of questions depending on their gender, with male competitors receiving more questions about their project's potential for growth, and female competitors fielding more questions about potential risks and losses — and that this had a very measurable impact on the funding they received.”

In addition, the team found that “women at TechCrunch Disrupt New York were faced with more negatively framed questions from both male and female VCs than male presenters were.” These question patterns were important because they led to smaller funding amounts for the women-led startups.

Once we are aware of these biases, we can change. Angels can pose questions on growth and risk to all entrepreneurs, and women entrepreneurs can learn to frame their answers to address growth opportunities.

More Women Angels — Better Connections with Women Entrepreneurs

Getting more and more women into the angel investing community is also critical. Women are now close to 25 percent of ACA’s membership and that may also be true for the whole angel community. There’s room for many more.

In my experience, women angels are extremely interested in investing in and supporting women entrepreneurs. They are also more likely to connect with women-led startups because of their social networks, leading to a different deal-flow than most male angels. “Most” is important here, as there are some male angels who are very focused on investing in women-led companies. They also tend to provide what I would call a more positive treatment of women entrepreneurs in Q&As and due diligence, while providing critical reviews of these investment opportunities.

At this year’s ACA Summit, there was a palpable movement and excitement among women angels to help women-led startups get funding and be successful. More than 35 percent of the 700 angels in attendance were women and about half of the expert speakers were women. 

I’m optimistic about the growth in the number of women angels. There are wonderful organizations that are “changing the face of angel investing,” such as Pipeline Angels, Golden Seeds, and Astia Angels (among many). And angel groups that started as mostly male are attracting more women investors for a “critical mass” that makes a difference in those groups’ deal flow, opportunity evaluation, and treatment of women entrepreneurs.

ACA is doing its part, too. Plan to attend the Women Investors Forum October 3-4, 2017, in Boston. Engaging speakers will present a range of angel investing topics that pinpoint the influence that women angels bring to the table. And, watch for details soon on a new ACA syndicate with regular calls focused on opportunities with women-led startups.

In the not too far future, I’m seeing a startup playing field that is going to yield more opportunities and homeruns for women-led businesses.