It's no surprise that more funding for women entrepreneurs coincides with an increase in the number of women angel investors.
In 2004, there were about 225,000 angel investors in the United States, and 5 percent of them -- about 11,000 -- were women. Fast forward to 2016, the latest year for which data is available, and you'll see an incredible change. There were approximately 300,000 self-described angel investors in the U.S. that year, and 26 percent of them -- about 78,000 -- were women. In the span of a dozen years, women stepped up in unprecedented numbers to become investors. The seven-fold increase in their ranks coincides with another upswing: a growing number of funded women entrepreneurs.
It's no coincidence that these two data points are trending upward together, nor is it coincidence that it's happening now. The growth in the number of women investors since 2004 coincides with a period of time in which women -- in large numbers -- have recognized they have the skills, interests, networks and capital to invest in ways that did not previously exist. As those women became angel investors, the number of women-led companies backed by angel investments also rose.
Data from the Center for Venture Research at the University of New Hampshire illustrates this correlation. In 2004, 3 percent of the 48,000 or so companies that received angel funding were led by women -- that's approximately, 1,500 women entrepreneurs accessing angel investments. In 2016, women-led companies represented 22 percent of all companies that received angel funding -- that's more than 14,000 female entrepreneurs receiving capital to propel their early stage companies.
It shouldn't be up to women investors alone to fund women-led companies, but there's no doubt that the momentum, determination and leadership of the growing community of women angels has enabled growth for women in entrepreneurship.
Women entrepreneurs: Founding 1,000 new businesses every day
There are a reported 300,000 new women entrepreneurs in this country every year. Of the almost 1,000 new women-led businesses founded every day, not all want funding, nor are all good candidates for it. However, the pace of entrepreneurship among women shows they have the skills, credentials and confidence to build businesses. And more women are realizing that they can successfully present their visions and plans and gain interest from investors -- both women and men.
Whether the angels involved focus solely on women-led companies, as we do at Golden Seeds, or simply practice inclusion on their own teams, having other women in the room increases the odds of securing funding for women entrepreneurs. The reasons for this can be debated, but it seems clear that gender diversity among decision-makers improves the chances that women entrepreneurs will be funded. In fact, the well-regarded Diana Project, a study by Babson College, concluded that venture capital firms with women partners were more than twice as likely to invest in companies with women on their management teams than those without women partners.
This is not about empathy. Rather, it may be that diversity among decision-makers opens minds to the possibility of investment in diverse entrepreneurs. Also, women often create businesses that are born of their own life experiences -- experiences other women may be particularly likely to recognize and calibrate as large opportunities. The goal for investors should be to create investing environments that will maximize the range of experience and diverse views offered by decision-makers.
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