In 2009, when Amy Norman and Stella Ma started pitching investors on their San Francisco-based startup, Little Passports, both had young children and Norman was pregnant. The overwhelming majority of the investors they met with were men who wanted to know “if we were running this as a ‘lifestyle company,’” Ma recalls. Investors passed and word got around Silicon Valley that “there’s no way women like this could grow a company fast enough” to satisfy venture capitalists, Norman says.
Yet grow it did, to $5 million in revenue five years later. Norman and Ma eventually raised nearly $2 million for their education business, which sells monthly subscription packages to help kids learn about geography. Much of the funding came from a female investor group that saw in the idea potential that eluded many men.
With ‘brogrammer’ culture spreading through the male-dominated world of tech, Little Passports’ experience reflects a contrasting trend: Women are running an increasing number of America’s startups, and they make up a growing share of the angel investors funding them. Today women make up about 20 percent of both the entrepreneurs and investors involved in angel deals, up from single-digits a decade ago, according to the University of New Hampshire’s Center for Venture Research (PDF).
Women made up 23 percent of all entrepreneurs seeking angel capital in 2013, up from 9 percent in 2005. There were fewer than 20,000 female angel investors in 2005, but that number increased to nearly 58,000 by last year.
The group that funded Little Passports, Golden Seeds, was founded nine years ago, making it an early female investor group. Managing director Jo Ann Corkran says the group has 300 investors, 72 percent of them women. They are committed to investing in companies that have in top executive positions at least one woman who holds significant equity and decision-making power.
All together, members from chapters in New York, Boston, Silicon Valley, and Texas have invested $50 million in 61 companies, Corkran says. The group also holds regular open office hours, giving company founders a chance to meet informally with experienced investors.
There’s no mystery about why women are underrepresented in the investor community, Corkran says. “If you make 77¢ on the dollar and you compound that over a lifetime, you end up with women having a lot less free cash flow.” Corkran is aware of the perception that women aren’t as comfortable with risk, but she doesn’t buy it. “They are as thoughtful and as willing to take a knowledgeable, considered risk as anybody else,” she says.
Natalia Oberti Noguera, founder and chief executive of Pipeline Fellowship, an angel investing boot camp for women, agrees. Since its April 2011 launch, her program has trained more than 80 women, who have committed over $400,000 in investment. Having started in New York, the group has expanded to Atlanta, Austin, Boston, Chicago, Los Angeles, Miami, San Francisco, Seattle and Washington.
The idea came about after Noguera attended a gathering of nearly two dozen investors as one of two women in the room. “These people were deciding whether or not to invest and they went around the room saying, ‘Well, my wife and her friends say this,’ or ‘My girlfriend says that.’ I realized then and there that women do not have a seat at the table.”
A Silicon Valley pitch-fest at which her all-female team presented to an all-male investor panel provided a further vivid lesson. “We were told, ‘The fact that you’re an all-woman team is too distracting.’ I came out of that realizing that we weren’t taken seriously,” she says.
If women are becoming increasingly influential as angel investors, however, they still have a way to go in the venture capital world. Alyse Killeen is an associate at March Capital Partners in Los Angeles, specializing in the fields of health and life science. Last year, she founded a networking and professional development group called Women In Venture. The group has about 18 members, but only two—herself and one other woman—currently hold jobs at venture capital firms.
The group’s goal is to provide encouragement and professional development that will help keep women in the field and advance them. Women now make up just 4 percent of venture capital partners. “We want to make it at least 20 percent women,” Killeen says.
She feels that along with her efforts, entrepreneurs themselves are pushing advancement for women. Both male and female founders are actively looking for diversity in their investment teams and on their boards and management teams, she says.
“We have had a few competitive deals come in because entrepreneurs who could have chosen from between 20 to 30 firms chose us because they wanted to work with a woman investor. It’s like, ‘Listen, all of our engineers look essentially the same, but we believe you can help us recruit women, and that will give us an edge,’” Kileen says.
Noguera is also hopeful, but says she won’t back off any time soon. “I tell people, don’t complain,” she says. “Just raise awareness of the issues and disrupt within the system, while creating our own systems. That’s the way we’re going to make progress.”