The real issues behind getting women into investment

I’ve been involved with the Western Australian Angel Investors (WAAI) for around 18 months now, and have come to reflect on the lack of gender diversity within the group and the community as a whole.

Too few women investors

With only one female out of around 40 members in the WAAI, the absence of women in the group impacts on what it can offer startups in terms of diversity of experience and perspective. WAAI Chairperson Greg Riebe acknowledges the problem.

We have tried to engage with women to join but it’s only really ever been men showing any interest. We did have one female committee member, but she resigned about a year ago. Jim Tweddle [WAAI co-founder] and I spoke about angel investing at a recent Women in Global Business conference, in an effort to attract some of those potential investors. Ultimately though, for us the focus is on developing membership and engaging with more investors, which will hopefully include more women, rather than targeting any particular demographic subset. We need to increase the understanding of what angel investing involves, we need to increase that awareness.

US stats suggest the proportion of female angel investors is around 20 percent, and in the UK, a report released a fortnight ago shows women now represent one in seven angel investors. So not quite absent, but still far from parity.

Perhaps this apparent shortage of female angel investors is partly explained by the lower numbers of successful female entrepreneurs, in effect, restricting the funnel of women investors. The recent Startup Muster survey found that 19 percent of Australian founders were women in 2013, up from 17 percent in 2012 and 16 percent in 2011.

Too few women entrepreneurs

Sheryl Frame works on the government’s Entrepreneur Infrastructure Program, and is also on the boards of Australian Women in IT, Science and Engineering, Women in Technology WA and Springboard Enterprise. She agrees that the lack of female entrepreneurs is part of the problem.

In my few years at Commercialisation Australia [the funding program which was replaced by the Accelerating Commercialisation component of the Entrepreneurs’ Infrastructure Program], I’ve seen only three women grantees, out of about 60 in total. At events like Startup Weekend, women tend to be under-represented as well.

According to a report published last September by Babson College, less than 3 percent of 6,793 venture capital-funded companies surveyed were female-led, and only 15 percent had a woman on the executive team. A recent survey of 350 female tech startup leaders funded by the Kauffman Foundation explored the challenges faced by women in entrepreneurship. The main issues identified were the lack of role models and mentors, and greater difficulties in raising finance. Interestingly though, another piece of research out of the US suggests that women entrepreneurs experienced a higher yield rate (defined as the percentage of opportunities that are brought to the attention of investors that result in an investment), at 25 percent, as compared to a general average of 21.6 percent.

A more worrying perspective perhaps is this recent Newsweek piece which suggests that sexism and misogyny were a big part of the problem in the US. It describes Silicon Valley as “a front line, if not the trench of the global gender war,” providing anecdotal evidence of a culture reminiscent of the Wolf of Wall Street days of the 80s/90s.