The Barriers and Opportunities for Women Angel Investing

Author

UK Business Angels Association

16 March 2018

Despite the fact that so many women are contributing to the UK economy through senior business roles, hold esteemed professional titles, and also represent a strong portion of successful entrepreneurs, very few women in the UK are using their spare financial capacity and business experience to back start-ups or early stage entrepreneurs. Clearly this remains an untapped pool of investment to support the nation’s innovators.

During 2017, UKBAA led a fundamental new piece of research, supported by the European Commission to explore the barriers and opportunities faced by women Angels in Europe. The detailed study was carried out in partnership with leading women investment agencies across 6 European countries that make up the programme, Women Business Angels for Europe’s Entrepreneurs WA4E. The study was completed to explore the perspectives and views of women in relation to the unique, challenging and rewarding space of Angel Investing, and the steps needed to establish a framework to improve balance in the ecosystem.

The report, The Barriers and Opportunities for Women Angel Investing in Europe is based on the participation of 640 women respondents across the six European countries that make up WA4E including, UKBAA and Angel Academe in the UK, Femmes Business Angels in France, IESE in Spain, IBAN in Italy and WomenWinWin in Portugal. The women that participated were highly successful business women with 42% having over 21-30 years of industry experience. 310 of the women were already Angel investors and 340 were not angel investing, which set the context for the research to establish perspectives on the culture, opportunities and perspectives of women from both sides of the spectrum, angel and non-angel.

Throughout the research women were asked a variety of questions that specifically focussed on their current approach to angel investing, their feelings toward the current barriers, and their opinions on what is needed to establish a lasting programme to build a stronger community of women Angels. The key findings of those not investing was a lack of awareness and access to information, a lack of opportunity to meet entrepreneurs, misconceptions of what angel investing is, and a deep-seated impression of angel investing being far too risky and reserved for the extremely wealthy.

“Women can be seen as bad mothers when they make risky investments, instead of investing in real estate to offer a roof to their children, while men who are fathers choose to make risky investments”.
WOMAN NON-INVESTOR

On the contrary though, women currently Angel investing showed that their key motivations stemmed from their passion for entrepreneurship, the joy and reward that comes with being a part of an innovative company, and the desire to do something interesting and useful with a portion of their investment capital. Making money out of angel investing came fourth in order of priority, which is indicative of the nature of angel investing – a rewarding return far beyond financial expectations.

“Why am I a Business Angel? Certainly not just for the money – it’s about passion for entrepreneurship, for new ideas, for innovation.”
WOMAN INVESTOR

One of the most significant findings in the report was that over 90% of the women, both investors and non-investors said that their financial advisors provided no information or advice about angel investing or the tax breaks that mitigate risk. Instead their advisors pointed them toward property, stocks and shares as low risk options.

“IFAs are prone to the view that angel investing is the ‘wild west of investing’. They’re so heavily regulated that they’re afraid of offering angel investing to clients as an asset. They often don’t know much about it”
WOMAN INVESTOR

These stark findings are not solely rooted in a lack of education or access to information on angel investing, many women who were investing or who had tried angel investing indicated that operating in an ecosystem largely male dominated can be intimidating and often difficult to fully access the breadth of investment opportunities available. With that though, it is abundantly clear that while women take up less space in the investing landscape, those that are angel investing back a significantly larger portion of female entrepreneurs than that of their male counterparts. This finding begs the question that if more women were to Angel invest, would we see proportionately more successful women entrepreneurs in Europe? The answer? Absolutely! 53% of women surveyed indicated that they invested in at least one company founded by a female, with many women having women entrepreneurs making up between 30% and 50% of their portfolio.

Where this takes us is what needs to be done to improve, empower and support more budding women Angels and Entrepreneurs alike. When asked, the women surveyed indicated that the action taken should comprise of the following:

1) Targeted Awareness Campaigns
2) Women Angel Investor Role Models
3) Sufficient Education on Angel Investing
4) Female Friendly Networks/Syndicates
5) Forums for Peer to Peer Support

UKBAA is delighted to be sharing this research and shining light on the steps necessary to see a more balanced Angel ecosystem. We will be pursuing an active campaign with a variety of actions, including awareness raising, events, workshops and bi-weekly news planned for the next few months. We will be working alongside our partners and key women players to educate, connect and empower women to pursue their passion of supporting entrepreneurs, and be a part of building a strong and innovative future.

For the full research report click here

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