Women Can Be Angels has become a federally designated non-profit so we sat down with founder Karen Thomas to learn more about this evolution and the purpose behind the company...
In 2016 WCBA founder Karen Thomas noticed there were almost no women attending Angel investor meetings, Startup pitch competitions or Entrepreneur showcases as investors. "I have a lot of smart, female friends who meet Angel investor criteria and spend considerable time and effort to advance causes they support. Since Angel investing is one of the best ways to manage wealth and invest in areas you support, I thought it was odd that there was rarely more than 1 woman in the room, and sometimes that only woman was me." said Karen reflecting back. "I'm a behavioral neuroscience geek so, of course, I just had to figure out why I kept seeing this unusual phenomenon." Turns out what Karen observed was something that many Angel organizations had been trying to figure out, too... Why aren't more women involved in Angel investing?
In her investigation Karen realized that the phenomenon seems to be the outcome of a perfect storm of influences:
First, Angel investing is only spread through word of mouth. Even though it's a strong wealth building tool (if used properly), it's not even taught in finance classes. "How many times have you wished you could have been one of those people who got in early on Google or AirBnB? That's Angel investing. If you wait until the IPO, you will never get the kinds of returns that the early investors see." Karen said.
Second, it used to be that men had the "checkbooks" so they were the original Angels. And since our cultural rules teach us to be uncomfortable talking about money/ our finances, if we do, it's only with our closest friends. So as Angels introduce someone else to Angel investing, it's to their closest friends and confidants... typically other men.
Third, the people we typically turn to for financial advice and guidance (money managers, wealth advisors, etc) don't get paid for Angel investment transactions so they either steer their clients away from them (sometimes trying to justify this by calling Angel investing "too risky") or they simply don't learn about it themselves.
Finally, Angel investing myths like "You need to be able to write a $100k check." or "You have to have $1 million in the bank." often scare would-be investors away. As long as you meet investor criteria, some individual Angel investments can be as low as $5,000 when a group of people are investing.
"I heard other theories as well." Karen shared. "'Women are too risk-adverse.' 'Women are too emotional to play in high-risk investing.' Someone even told me that 'Women just don't want to Angel invest.' All horse hockey." said Karen. "While it is true that women tend to do more due diligence and desire a higher comfort level with any endeavor, that has been found to be something that actually makes them better investors; not worse ones."
Consequently, Karen realized that until there was a concerted effort to educate more women on Angel investing, nothing would change. And this is a problem for both the women who are missing out on a key wealth building tool, as well as the Entrepreneurs and innovation-dependent markets that could benefit from having more Seed stage funding available. "Women's personal finances are already behind due to the wag gap. So if you add an investment return gap on top of it, our standard of living is very, very different later in life. It doesn't have to be this way, and so we need to fix it." Karen says. "And as an Entrepreneur, I can't imagine how amazing the innovative world might look if even a portion of the thousands of women who could be supporting new ideas started Angel investing."
So Karen began telling several of her friends about Angel investing. But she quickly came to realize that with so many women interested and the time it took to have one-on-one sessions, this was going to be an effort that needed to be organized. So in September 2016 she formed a group and called it Women Can Be Angels using a website and social media platforms to distribute information and connect women to learn about Angel investing. When asked about why she didn't just join others' efforts, she said: "While several organizations like the Angel Capital Association, and some Angel groups and funds are offering fantastic educational tools, I knew forming the group separately served 2 purposes: (1) we want to educate women who might ever want to Angel invest, so we don't worry about whether they currently meet investor criteria and that allows us to reach more women than Angel recruiters, and (2) to my knowledge, we are the only Angel education group that does not invest directly or serve investing organizations so our members tend to trust us because they know we get no benefit if they decide Angel investing is right for them."
Now, just 18 months later, the group has grown into a non-profit education company. "With the 501(c)3 designation, we will have new funding avenues that will allow us to produce and access more educational content and offer more networking and mentorship programs to help women evaluate Angel investing for themselves." said Karen. "And we can't wait to see how our women will impact the world."