More female angel investors means more funding for female entrepreneurs

In the past 14 years, we’ve seen an extraordinary rise in the number of women angel investors in the United States — a more than 400 percent increase between 2004 and 2017. Just as women have claimed a larger share of the pie in the angel investing community, a growing number of women have also secured funding for their businesses.

This is not a coincidence.

The women who have recognized that their skills, interests, networks and capital qualify them for entry into the world of angel investing have left the door open for a growing number of women-led startups in search of funding. Consider two data points about early-stage companies that correlate to the rise in the number of women angel investors:

• In 2004, there were 48,000 companies that received angel investments. Three percent of those — about 1,500 — were led by women.
• Thirteen years later, in 2017, women entrepreneurs represented 24 percent of all the companies that received startup funding — a jump to more than 14,000 women-led companies.
• The women who have recognized that their skills, interests, networks and capital qualify them for entry into the world of angel investing have left the door open for a growing number of women-led startups in search of funding.
• Male angels investors back women-led companies as well, of course, but clearly there is a correlation between the momentum of women investors and the increased funding for women entrepreneurs.

Why is this?

Babson College’s Diana Project found that venture capital firms with women partners invest in companies with women leaders twice as often as VC firms that do not have women partners. When there is gender diversity among investors, there is also diversity of life experience, interest and understanding about the range of businesses that can create value. It’s not surprising, then, that there is also gender diversity in the entrepreneurs in whom they choose to invest.

Regardless of the gender of the entrepreneurs seeking funding, investors want to see:

• A strong leadership team
• Realistic budgets
• Specific goals
• Open communication with investors
• Evidence of past success

That final point is another area in which women founders are advancing. Women founders can either stress their operational or management experience, their education or — increasingly — their previous entrepreneurial success. In fact, serial entrepreneurs comprised one-third of new Golden Seeds investments in 2017. Whatever the source of strength in their backgrounds, women entrepreneurs must convey confidence in their ability to succeed, their understanding of the best business model for success and their ability to adapt, especially as business realities change — as they inevitably do in the early stages of a company.

As the numbers rise for both women investors and women entrepreneurs, the potential for value creation rises for everyone.

Learn more about Golden Seeds companies and how women entrepreneurs are achieving success with Golden Seeds.