Angel Investing – Investing in Women Entrepreneurs

successful word cloudIn their soon to be released book –  What Every Angel Investor Wants You To Know  – An Insider Reveals How To Raise Smart Money For Your Billion Dollar Idea (McGraw Hill, 2013), Brian Cohen, Chairman of New York Angels, and John Kador, demystify the process of Angel investing.

Of particular interest to me is Brian’s experience with investing in early stage companies that are either founded by women or where women serve on the senior leadership team. There is lots of buzz these days on how women should or should not position themselves to excel in the corporate ranks. In the excerpt from his book below, Brian provides us with some great DATA as well as opinion on the case for investing in women.

Excerpt: Startups Led by Women Do Better, authors Brian Cohen and John Kador
“I pay special attention to startups that are founded by women entrepreneurs or have women as senior executives. My experience is that angel-backed startups led by women have definite advantages in the marketplace over startups where only men are in charge. It stands to reason: women consumers make the majority of purchasing decisions in this country. Businesses with significant women leadership in product design and marketing will tend to outperform companies without such talent.
I look for startups with leadership by women because The Nielsen Company estimates that almost all income growth in the U.S. over the past 15-20 years has been generated by women exercising their growing economic influence. Women today are responsible for 83 percent of all consumer purchases and 55 percent of all consumer electronics, according to Maddy Dychtwald, author of Influence: How Women’s Soaring Economic Power Will Transform Our World for the Better.
A new report that tracks startups and their investors sponsored by Dow Jones VentureSource found that startups have a greater chance of either going public, operating profitably or being sold for more money than they’ve raised when they have females acting as founders, board members, C-level officers, vice presidents and/or directors. At successful companies, the median proportion of female executives was 7.1 percent versus 3.1 percent at unsuccessful companies. The study followed 20,194 U.S.-based companies that either received funding or exited between 1997 and 2011. Only 1.3 percent of the companies had a female founder; 6.5 percent had a female CEO; 20 percent had one or more female C-level executives, most commonly in sales and marketing roles. The Women at the Wheel report does not speculate on why female executives improve a company’s chance of success.
Women are underrepresented in virtually every aspect of business, including the startup community. This book is not the place to speculate on the sources of that underrepresentation. All I want to suggest is that gender diversity is good for startup because it drives different points of view when decisions have to be made. Women, for instance, are more likely than men to consider feature-sets, market segments, or brand statements designed to appeal to women.   Women also tend to be more concerned about the emotional well-being of their team. As an angel who’s seen his share of the startup teams blow his investment to shreds because of internal squabbles, the stabilizing presence of women confers a competitive advantage. As the father of a daughter just embarking on an entrepreneurial career, I bring more than an academic or financial interest to this important issue.”
Thank you Brian for your continued support of women entrepreneurs, I look forward to reading your book!
Brian Cohen is currently Chairman of New York Angels, one of the oldest and most active angel investment groups in NYC.

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