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Giving Compass' Take:
• Geri Stengel reports on the importance of supporting more female entrepreneurs, noting that angel investing could be a great way to do so.
• The more women investors, the more female founders get funded. Are organizations doing enough to encourage this trend? This article provides a roadmap to overcome several obstacles and recognize opportunity.
Funding is a challenge for early stage companies. It is especially difficult for female founders seeking equity financing. Men receive 9 times more equity financing for their companies than women, according to High Growth Women-Owned Businesses’ Access to Capital commissioned by the National Women's Business Council. Increasing the pool of angels willing to invest in women-led companies will improve the odds of success for female founders.
One form of equity financing is angel investment. Angels invested $21.3 billion in 2016, according to the Center for Venture Research at the University of New Hampshire. An angel investor must be accredited, meaning she or he must generate an annual income of $200,000 ($300,000 as a couple) and/or have a minimum net worth of $1 million, in addition to their home. From 2006 to 2016, as the number of women angels has doubled, there has been a corresponding increase in the number of female founders getting funded — nearly doubling from 7,037 to 13,962.
Alicia Robb is a researcher and Ph.D. economist specializing in entrepreneurship and entrepreneurial finance. She also was a Senior Fellow at the Kauffman Foundation, writing two books on women entrepreneurs. Her research revealed several barriers to women and minorities who want to become angel investors:
- not being asked
- not knowing what angel investing is
- not knowing other angel investor to work with
- not seeing deal flow
- not wanting to make a large investment
For the past couple of years, Robb has been testing a new model to remove those barriers and bring on more angel investors.
Read the full article about how to increase angel funding for women entrepreneurs by Geri Stengel at Forbes.