As it’s International women’s day, we wanted to focus on the growing trend of female angel investors. It’s a tough truth: women entrepreneurs have a harder time getting equity financing than men. This is more than just a feminist issue – it’s a critical economic one too. If the same amount of women entrepreneurs funded businesses as their male counterparts, over six million jobs would be created in just five years.
But, even with these biases prevalent, women and investors can take steps to mitigate them. By becoming angel investors, women can open doors to new opportunities, and have the chance to advise the companies they invest in. Female money, expertise, and influence should be able to fuel the fires of a startup company the same as the males.
Since both corporate finance firms and most investors invest in those that are similar to them, female angel investors will increase the amount of women-led companies that get invested in. Despite this, angel investing remains a mystery to most women, with most rather “donating” their money rather than “investing”.
This trend needs to change, and more women should take the leap into angel investing to begin to be a part of the change they wish to see. Here are five ways women can help both themselves, and others, by becoming angel investors:
- Your Wealth Can Advance Another Woman’s Economic Agenda
Women’s increasing economic power is changing the world. Women angel investors tend to invest differently in investments, and it’s important for women investors to play a more active role in business funding and development than just “donating” funds.
By putting more “skin in the game” – aka playing an active role in business development – women can support mission-driven women entrepreneurs in a special way that they might not otherwise receive.
- Female Angel Investors Can Gain Confidence from Their Track Records
However, with that being said, 70% of women say they don’t want to be actively involved in the investment process. This could be because most women feel they know less than the average investor, while men typically feel they know more. But it simply comes down to having confidence in yourself and your investing ability.
Women who have confidence are excellent investors, with women-owned or managed hedge funds performing better than those run by men for three years running. This is because women spend more time researching their investment choices, tend to take less risk than men do, hold onto their investments longer and often seek out business plan consultants to secure strong investment deal flow.
By being aware of your capabilities, receiving the tools that help you succeed, and being introduced to other successful women investors, female angel investors can help move themselves and other female business owners forward.
- Do Good and Get a Return On Investment
To become confident investors, investing needs to move beyond just charity and philanthropy for women investors. One female social entrepreneur stated that she chose to be a nonprofit rather than a for-profit simply because she felt women were willing to donate freely to her cause, but wouldn’t invest in it as a business.
This mindset needs to change for female angel investors. Women will ultimately have more effect in the change they want to see by taking control of their investments and creating greater wealth for themselves, as well as for other women.
Look for business opportunities that not only benefit causes you believe in, but also ones that will give you profits on your investments.
- Put Your Knowledge To Work
Once you have written that first check and entered the world of angel investing, take what you’ve learned (and earned) to help promote further leadership of women, as well as cultivate future classes of female founders. By putting your knowledge to work in new ways, helping other females who are now in the place you once were, women investors can really accelerate the growth of other female entrepreneurs and investors.
- Increase Your Skills as Female Angel Investors
As well as finding new ways to put what you know to work, try finding ways to gain new skills. Adults learn best through experiential learning, and hands-on angel investing is a great experience for doing just that. Get involved in new opportunities that teach you new things and give you a new experience that will increase your skill set.
As we see an increasing number of very successful female angel investors, the higher impact they’ll have on businesses and the economy. Not only will it lead to more female founders receiving funding, it will also get more women onto boards and hired as executives.
Entrepreneurship has great potential to help improve people’s lives, but it’s only when there’s full participation by all parties, that it will be able to achieve that full potential.