According to a 2011 report by the University of New Hampshire's Center for Venture Research, only 13 percent of U.S. angels were women.
Investor Halla Tomasdottir described the benefit of women investors in her 2010 TEDWomen talk in terms of diversifying interests and decision-making:
The whole thing about the female trend is not about women being better than men. It is actually about women being different from men -- bringing different values and different ways to the table. So what do you get? You get better decision-making and you get less herd behavior and both of those things hit your bottom line with very positive results.
Other thought-leaders like the Kauffman Foundation describe the dearth of women investors in terms of lost human and economic potential:
The untapped human potential [of women owned enterprises] in total, is surely vast. It is just starting to be recognized as a long-term competitiveness issue for this country and others. More angel investing is not the only answer, but it is an essential element, and women must be part of it.
Women investors also provide an important pipeline for jumpstarting women-owned enterprises. The Kauffman Foundation reports that census data show that women now own nearly 30 percent of all businesses in the United States, up from 5 percent in the 1970s, but they still own fewer than 10 percent of all firms with annual revenues of $1 million or more. Women-led companies also lag in the share of venture capital received and in other indicators of high growth and impact. Indeed, the foundation found that women investors are more likely to invest in women-owned enterprises, thus bringing formerly unrecognized companies -- and their founders -- to center stage.
Women in general tend to be more conservative and less experienced investors than men of equivalent wealth. Additionally, not many women as yet have the kinds of backgrounds from which angel investors are most likely to come. Laura Roden, of The Angels' Forum, LLC in Palo Alto notes that relatively few women have taken a high-growth startup through to an acquisition or IPO and then become "cashed-out" entrepreneurs who are most inclined to become "active and consistent angel investors."
Realizing the importance of women angel investors, the Pipeline Fellowship was born. The program seeks to increase the number of women angel investors through its six-month angel investing bootcamp, which is specifically designed for women who are first-time angel investors. While Fellows come from a variety of backgrounds (law, finance, healthcare, the arts, small business, and more), they all share a common interest in learning to invest for good.
With corporate sponsors like Goodwin Procter LLP, Thinkso, and In Good Company Workplaces (IGC), Pipeline utilizes education (modules on due diligence, term sheets, valuations, board governance, etc.), mentoring (matching each participant with an experienced angel investor to serve as a role model), and practice (participants commit to invest in a woman-led for-profit social venture at the end of the training) to create a new generation of women angels.
The angels' mission is to invest in a women-led for-profit social enterprise, where they evaluate financial return and social impact. Fellow Jessica Roazzi-Magoch described her initial interest in Pipeline:
I had a little capital to invest, but I was too scared to do it on my own. I know about sales, I know about health insurance, but I didn't know how to evaluate a company... That is precisely what we have been learning.
With the first class preparing for its graduation, Roazzi-Magoch mentions that the class has narrowed their investment choice to two companies.
One of the companies we are looking at knows that they have been glossed over by other VCs because the social impact tends to limit the financial return. Most of these companies are never going to have the ability to offer a return 20 times the investment, so many traditional VCs are not interested. Most social enterprises just don't ever have the opportunity to offer this return so the are thrown out of the mix right away.
Pipeline's mission to fund two underrepresented segments of investment -- women and social enterprises -- is a notable one, and its impact will be determined by its ability to scale. Founder Natalia Oberti Noguera is already planning similar programs in San Francisco and Los Angeles for next year. Roazzi-Magoch is eager to stay involved.
"Investors invest in what they know," she explains. "If men don't feel they can contribute anything to a women-led company, then they are not going to choose that company. Through Pipeline, we can make a little bit of a dent in this pattern and help women led companies flourish."
For more information about the Pipeline Fellowship, visit http://pipelinefund.tumblr.com/.