Despite the rise of women executives at the head of some of the largest US corporations and most powerful foreign countries, there are still few women entrepreneurs in high-tech. There are even fewer women investing in early-stage companies. Not that they lack the smarts or the courage to start a business; we all have experienced these qualities in many women in our lives. The difficult choices needed to balance family life and a career, as well as the limited vocations in the scientific field, are the most common explanations.
For the International Day of Women, we decided to talk to two women who started a business angel network. Brigitte Baumann is the founder of Go Beyond in Geneva, and she is the President of the Board of EBAN, the European trade association for Business Angels and Seed Funds. Stephanie Hanbury-Brown has been a Managing Director at Golden Seeds since its inception in the New York City in 2004. They accepted to share their experience, and allowed us to go beyond stereotypes. They are, in the true sense of the word, angels to other women.
Brigitte Baumann invested in her first business when she was attending Wharton business school. One of the myths in the industry is that it takes more money to play at the table than it actually does. That is one of the take-away's that EBAN reported in a white-paper on women and early-stage investing in Europe. The ticket per angel per deal is closer to $10,000 than $100,000 contrary to what most professional people think.
“Our members invest $35k on average with a minimum of $25k”, explains Stephanie Hanbury-Brown of Golden Seeds. “They still have to qualify as private investors in their State. We typically advise them to allocate $250-500k to make ten investments over time and build a portfolio.” Stephanie started her career on Wall Street and worked for a long time at JP Morgan in New York City and around the world.
In her late forties, she decided to go for a second career and support women entrepreneurs. She teamed up with two other Wall Street women to cultivate women CEO's. Golden Seeds invest typically in a dozen companies a year and they are the fourth largest angel network in the US in terms of membership. Angel members are 80% women and they require that at least one of the founders be a woman and make part if not all of the investment pitch.
The process of Golden Seeds is not that different from other angel networks. After careful review of applications, selected entrepreneurs are invited to a first screening, followed by a forum if they make the cut. Their 240 angel investors are present in Boston, Dallas, Los Angeles, San Francisco and Palo Alto. They also have an activity in London in the UK. If members are interested after hearing the picth, they get together in a room with the entrepreneurs and go through the usual term-sheet, due-diligence, and syndication process before putting the money in.
Between 2005 and 2011 Golden Seeds has invested $34M in 42 companies. But the benefits of the business angel network do not stop here. “It helps to have mentors who are women” Stephanie explains. That is because there are other life factors when someone starts a company, and it is easier when you can relate to someone who has been there before.
On the other side of the Atlantic, Brigitte echoes this sentiment. She designed her angel network to make it easier for women to become angel investors, leveraging her own experience. Go Beyond does not specifically invest in start-ups run by women, but built-in values that make it more attractive to women to be angel investors. A lot of women find themselves lost between high-tech funds and social impact investing.
That is why Go Beyond included sustainability in their values for example, and they tend to focus on triple bottom-line. “You will always find women like me who are a bit like guys. But that is only 5-10% of the time”, explains Brigitte who does not hide her competitive edge. She competed at the highest level at American Express, and was involved in the project with Microsoft that led to the creation of Expedia. She then took the head of a VC-backed company. “Six weeks after I was nominated President, I was pregnant", recounts Brigitte, "I thought that it was the worst time for it, and it turned out to be the most beautiful time of my life. Somehow I managed!”
Both experiences were good monetary-wise, so she took a year off in 2003 to think about how to stay involved with the entrepreneur community. She thought about how to use technology to make angel investment more of a community experience, which is attractive to women, and to reduce the time constraints. According to her, this is a critical barrier for women who balance famility priorities and a career.
GoBeyond uses a collaborative platform to share legal documents, simplify flow processes, and use video streaming for meetings as much as possible. This way angel investing can take only several hours a month and become more accessible to women. As a result, Go Beyond accounts for more than 30% of women in its membership without specific targeting. That is unusual in Europe where less than 10% of women are business angels compared to 12% in the US according to the OECD.
Go Beyond will do about 20 deals this year, ranging from $50k to $500k. They have over 100 members in five European countries (Switzerland, Italy, France, UK and Poland) and the US. They work with a number of families and corporations as co-investors who share the same mission. “Investing in early-stage companies is really investing in the entrepreneurial team” points out the CEO of Go Beyond.
Brigitte Baumann makes the case that angel investing is a transformational experience and can help women in their careers: "Angel investing is a fantastic in-transition activity." She recommends other women excutives to do the same, so they can build up other skills in their career beyond their specific expertise, whether it is Marketing, Finance or another field. “If you love business ventures, you are already an angel” she notes.
One of the first women entrepreneurs whom Golden Seeds invested into is now a member. She did well for herself, and her investors as well, and it was a fairly natural move. It is not the case for many women, and both Golden Seeds and Go Beyond provide training. Investing is a process and it is highly selective. “Out of 400 applications, we typically end up invest in only 2.5%” explains Stephanie Hanbury-Brown of Golden Seeds.
As I talk with Brigitte and Stephanie, I realize that there are not that many differences with men investors despite a few specificities in interests (less technology and more consumer like fashion) and time schedules (children). For example, the average age of women entrepreneurs getting funded is between 35 and 40 year-old at Golden Seeds, which is the global average.
Good ideas and opportunities happen organically. Women and men entrepreneurs tend to mature about the same age on average, which is different in scientific careers where women tend to peak in peer reconnaissance 3 to 5 years later. There is however a large spectrum of entrepreneur profiles. For example, Golden Seeds invested in a few women entrepreneurs in their twenties and a woman executive in her sixties. Like having a baby, there is no right time or good time to become a business angel according to Brigitte Baumann of Go Beyond.
I ask Brigitte what she would say to a young woman finishing College: "It is like sports. Start investing early! I did not always know that what I was doing was angel investing, but it was always a fun part of my life. If you do it, find the right environment". Both Stephanie and Brigitte advise both women and men to work with professionals so their portfolio do not fall apart and they can continue to do well while doing good.