Women own almost half of the UK’s wealth. This fact alone is quite astonishing since only 100 years ago women couldn’t vote not much before that women couldn’t own property. Still today, women earn on average 17% less than their male counterparts, so our wealth ownership is all the more impressive. Despite this, only 14% of angel investors in the UK are women.
This brings various problems including: First, women are not attracted to a male dominated club, second, there are too few women on start-up boards and, female founders are not getting the funding they deserve. Only 9% of investment is dribbling into female founded start-ups and men are still nearly twice as likely to be entrepreneurs.
If we could encourage more women to invest in start-ups, then female founded companies will be subliminally encouraged to seek financing and the improved female representation across start-up boards will lead to better problem solving, more considered decision making and shrewd strategic thinking. If that’s not enough to convince you that we need more women investing then answer me this, why are we letting the men have all the fun? Investing in start-ups is meaningful and gives you a thrill and an energy that the stock or property market just can’t match. Let’s delve into the reasons why women don’t invest and why they should.
Why don’t women invest?
Investing in start-ups is considered high risk. It is riskier in nature than the stock market or property. Why? Because these are young companies who are yet to prove their viability and in the wild west of entrepreneurship, they will be faced with challenges, cut throat competitors and countless obstacles. With only 10% of start-ups succeeding, becoming an Angel Investor is not for the faint hearted.
Men are considered to be more risk takers, but is this reality or perception? Men are prominent in high risk roles: the army, race car driving and endurance adventures, but is this because men have a healthier appetite for risk or because women were not allowed to take on these roles once upon a time? Is now the time for women to embrace risk? To quote Mark Zuckerberg, “The biggest risk is not taking any risk… In a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”
Regardless of this risk debate, is the point moot? Although investing in start-ups is inherently risky, women have been found to be excellent Angel Investors as the key to mitigating risk is due diligence and women are often the ones who really kick the tyres, ask the right questions and dig into the weeds. Knowledge really is power when it comes to deciding who to back. The more data points you gather and analyse in terms of the market, the team, the product and the legal documentation, the higher chance you have of making a well-placed investment.
Not your place
Has someone invited you to join an Angel network? Does your accountant tell you about S/EIS schemes which save you up to 50% tax? Do your friends talk about their latest punt on a hopeful Unicorn over dinner? I doubt it. Women are not encouraged to join Angel networks and perhaps this is a butterfly effect from the low representation of women in tech and in finance. Only 17% of working women are in tech, and only 23% of women account for board members and just 14% of executive committee members across UK-regulated financial services companies. Or perhaps it’s the self-perpetuating cycle: Women are not currently investing in start-ups, so they don’t learn how to invest in start-ups or don’t hear about it and therefore new women don’t start. Let’s break the cycle, let’s start the conversation.
Myth #1. I must pay into a fund to join an investment network and a management team decide how to handle my money.
Truth. Absolutely not, Angel Networks such as Kent Investors Network are a group of individual investors who each make their own decisions whether to invest or not and how much to invest.
Myth #2. I need to be a millionaire to play.
Truth. As long as you meet the FCA criteria for a high-net worth or sophisticated investor then you’re in! Investments are often around £10-50k per company but can be lower.
Myth #3. I must start investing as soon as I join a group.
Truth. At Kent Investors Network you can join our pitch events as many times as you like before you decide how to spend your hard-earned dosh.
Why should women invest?
The feel-good moment
Entrepreneurs are our future. Small business owners drive the economy, invent life changing technologies and create jobs. You have an opportunity to shape these innovators, these dreamers, these high achievers. Angel investing should not just be about money. Your mentorship, advice and imparting of experience is worth twice the value of the pennies you invest. By guiding these young entrepreneurs you’re turning them into successful business leaders. It’s these relationships, this community which shapes our world and truly makes a difference.
Angel investing is considered ‘smart’ investing. This term comes from the investor bringing their intelligence to the table, but it works both ways. Investing in start-ups keeps you informed in latest trends, disruptive technologies and innovative creations. Spending your free time debating strategic growth options, dynamic team formation or creative marketing designs, will stimulate your brain and keep you connected to topical business issues.
A new adventure
Working with start-ups is an adventure. Every day brings new challenges, you’re interacting with energetic people and working on game-changing businesses. It won’t be a smooth ride, but you certainly won’t be bored. Launching a new product or service and securing those first few customers is thrilling. You’ll be on the edge of glory with skin in the game, it’ll be an unforgettable experience.
Managing Partner, InEn Global LLP
CEO, Kent Investors Network