Women Angel Investors on the Rise

What a difference a year makes!  In 2011, the Pipeline Fellowship  began as a single program in New York to train ten women to become angel investors and support women social entrepreneurs.  In 2012, the Pipeline Fellowship is expanding to include two locations, four programs, and will train forty women.  How many organizations can say they are experiencing a 400% increase in their first year!

According to founder Natalia Oberti Noguera, “The Pipeline Fellowship is committed to increasing diversity in the angel investing community and training a new generation of angels to invest for good.  The Pipeline Fellowship is hoping to have an impact on the enormous disconnect between the number of businesses being started by women and the number of women receiving venture capital – a vital source of funding for start-up businesses.  

Why do we need more women angel investors?  In a word – jobs!  A report by The Guardian Life Small Business Research Institute projects that female-owned small businesses, now just 16% of total U.S. employment, will be responsible for creating one-third of the 15.3 million new jobs anticipated by the Bureau of Labor Statistics by 2018 (Forbes.com January, 2010).  However in order to create those jobs, new women-owned businesses need better access to capital.

"Historically, venture capital has been the much-acclaimed boys’ club," says Mark G. Heesen, President of the National Venture Capital Association. "That network is something women have to permeate. It's harder for women to break into that arena."   According to the University of New Hampshire The Center for Venture Research, women represent only 13% of angel investors.   Since angel investors rely heavily on relationships and networks when making investments the result is that women business-owners do not have the same access to funding during the crucial start-up phase.

Two additional statistics demonstrate the disparity.  First, from 1997 to 2011, “the number of women-owned firms increased by 50% - a rate 1 ½ times the national average.” (State of Women Owned Business Report)  Secondly, in the first quarter of 2011, women-owned ventures accounted for only 12% of the entrepreneurs seeking angel capital. (University of New Hampshire The Center for Venture Research)

2011 NYC Pipeline Fellowship Mentor Ed Reitler, Senior Partner at Reitler, Kailas & Rosenblatt LLC, says, “It is incredibly important that the venture ecosystem include women as angel investors.  They are crucial to ensuring the funding of a more diverse group of companies."  This sentiment was echoed by Jakki Haussler, Chairman and CEO of Opus Capital Management who said, “women and minority-owned small businesses stimulate local economies, serve as catalysts for innovation, and provide much needed jobs.”

The 2011 NYC Pipeline Fellowship is not only educating women to be angel investors, they are also putting it into practice what they are learning by making an actual investment.  During the program they reviewed numerous business plans of women-owned, for-profit, socially responsible businesses and selected eleven to participate in a business plan pitch summit.  After listening to the various business plan presentations, the fellowship trainees conducted due diligence reviews.  At the end of the due diligence process they developed a term sheet and selected one company to receive an investment.

The fellows selected PhilanTech to receive a $105,000 investment.  PhilanTech created an innovative online grants management system to help both funders and non-profits streamline the grants management process ensuring fewer grant dollars are spent on administration and more on providing much needed services.

Even though PhilanTech's founder Dahna Goldstein was selected in 2009 as one of BusinessWeek’s “25 Most Promising Entrepreneurs” she still had difficulty getting the attention of angel investors and venture capital.  She said, “While the capital the 2011 NYC Pipeline Fellows invested in PhilanTech is critical in helping us get to the next stage, the value the Fellows bring is so much more: PhilanTech now has a group of smart, dedicated, diverse, and connected women committed to our success, growth, and impact.” One of the fellows, Conor Barnes, has been selected to join the Board of Directors of PhilanTech.

Having graduated the first group of angel investors, the Pipeline Fellowship has expanded.  They have doubled their programs in New York City, and opened a program in Boston.  In addition, in February they are starting an Executive Program for women outside of Boston and NYC.  The new programs will train forty new women to become angel investors and provided significant start-up capital to four women social entrepreneurs.   Each new program is a step in the right direction, increasing the network of women investors and reaching more women-owned businesses.