Title : Marie-Elizabeth Rusling: You too can become an angel! - A case for women investing.
Date : 8 March 2018
This month we are delighted to have Marie-Elisabeth Rusling, LOW Associate and Business Angels Europe’s CEO & Secretary General of the Board, writing for us on women in business and entrepreneurship.
It may be customary every 8th of March on International Women's Day to remember all the efforts, achievements, and fights won and lost to advance women’s' rights around the world.
In Europe, we’re very good at basing such celebrations on history, analysing progress (even as recent as is the case for women's rights!) and shortcomings, getting inspiration from reference figures. We Europeans like to work in the mode of "all lessons learnt"...
The Chinese, on the other hand, according to the formidable business woman and writer Yan Lan, former Head of Greater China Investment Banking at Lazard, simply look forward. Her personal story certainly reminds us of the importance of doing just that.
Listening to her, I thought that's how I'd like to approach the 8th March. Looking forward and contemplating what I can do from my perspective as CEO of Business Angels Europe, the European Federation for Angel Investing.
I want to talk about:
- women's incredible motivation to give back and play their part in today's entrepreneurial world;
- how women engage in exciting investment projects;
- women and smart money.
Not about the inferior pay level that characterizes women salaries - the infamous gender pay gap... A gap which alas is not narrowing much. Despite some efforts the median wage of a woman working full time in the OECD is only 85% that of a man. The UK banks have started disclosing their gender pay gaps and they are truly shocking.
Not about men outnumbered by women in positions with lower salaries and limited prospects of promotion. We understand that professions and industries indeed "segregate" men and women, as the Economist coined it in an article last October* - more women than men are attracted to the professions that pay less. (And I tend to concur with the Economist' s conclusion that only more work flexibility could change the situation. Over the years, like many female professional friends, I shifted on these issues and became impatient. I am now convinced that without legislation and even quotas in place, it will just take too long for the barriers to fall, for new patterns emerging in society to be reflected in the work place).
When it comes to investment - looking forward, anticipating, betting even... women, we hear (we knew, but our gut feelings are now confirmed by solid research) can bring a lot to a team: the case for diversity has been made. It is reassuring to hear evidence that mixed gender fund management teams consistently attract more financial inflows and generate better outcomes.**
As women live longer, financial planning and female investing not only makes sense but women actually also outperform their male counterparts in earnings by around 1% a year. The figure may seem low but if you start young it means outperforming male investors by app. 250 000 US$ over a life time. This investment data collected by Berkeley University and the University of California has not been lost on many players who increasingly target women as an important market, not a niche anymore, developing tools for women to get into investment. Matching needs to have "clear and simple explanations", cutting the jargon, meeting expectations to overcome the "being left out of conversation" feeling many women stress when it comes to investment and have to explain their lack of confidence or knowledge to justify, despite apparently being in control of more than 50% of rich countries' wealth, that they do not seek more involvement.
Even at the high end of the market, as a High Net Worth Individual, or as a non professional yet sophisticated investor, a woman typically has extensive professional experience, networks, investing track record, may have founded one or more businesses and possibly exited positively at least one. Still, only 10% of these women has, on average, in Europe, taken the step to become an angel investor - US figures may be higher and closer to 20%, yet, proportionally the gap remains huge with the male dominated early-stage investment community.
A recent study carried out as part of a European pilot project to increase the number of women angel investors*** provides food for thought for today's celebrations. The WA4E survey coordinated by Business Angels Europe**** looked into the motivation factors and obstacles faced by women who already invest as angel investors, and tried to understand the barriers and challenges for women who do not invest.
Angel investment covers a crucial gap in the funding of innovative companies by providing smart money - capital, competences and contacts of the individual investor, the business angel, to the start-up. The company has usually either relied on "love money" - family, friends ... and fools, or on loans to finance its first steps, and does not yet interest venture capitalists much. It is a risky time both for the founder and the angel, who form a partnership for growth. In exchange for equity and advice from the angel, the company secures funding and support to build its path to success, bringing its products to markets and growing - fast.
It is risky investment, with chances of success around 1-2% to see the innovative company disrupt the market to a point that it can be called a success story, then scale up and flourish into a top innovator that is effectively making money, can reward its backers, impact its ecosystem, create value locally and beyond. A great way to support business, learn more about the industry and share knowledge; a great way to boost our economies.
In a remarkably coherent fashion, from Lisbon to London and Brussels to Barcelona, more than 600 women questioned last summer described again and again the same obstacles that limit their action and first steps. Financial advisors only very marginally encourage them to take risk. Women themselves believe angel investment is only for the super-rich, do not feel they have all the decision-support elements - and they do not know whom to turn to for advice, information, getting started. A lack of role models does not help. Working with hundreds of women investors and potential investors, our research however found incredible motivation. Women wish to play their part, give back, contribute, keep in touch with business and tech trends, and with their peers. Can they find the time (an important issue raised)? Can they balance the careful process of angel investment, which they overwhelmingly state they want to do only well prepared, with the other priorities in their life?
This is where I try to now play my part to engage with potential women investors, to team them up with experienced angels, to demystify the whole process and genuinely build a community that sparks entrepreneurship in Europe, whether male or female.
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