In the last decade, the Maine Angels has quadrupled the portion of its members who are women, mirroring a national trend that has seen more women getting involved in early-stage investing.
The Maine Angels is a membership-based organization for high-net-worth individuals who invest in early-stage companies. The group’s members pool their collective talents to vet, invest in and support promising entrepreneurs. Last year, those members invested $3.3 million in 19 companies.
Today, one third of the group’s 86 members are currently women as compared to only 8% in 2011.
That increase in female membership is the result of a decade-long project initiated by Sandra Stone, who served as chair of the Maine Angels from 2011 to 2015.
“When I joined the organization in 2005, there were only two or three female members,” said Stone.
That percentage did not change much over the next five years, but in 2011, when Stone became chair of the Maine Angels, she started to challenge her male counterparts to “invite one female accredited investor to the group’s next meeting.”
While there is national data that shows an increase in female investors at the table leads to more venture capital flowing to female founders, there’s not enough data locally yet to find a corollary result.
“The angel community is just starting to get behind female investors and tracking data by gender,” Stone said. “I think there is huge value in just sharing the success Maine Angles has seen in increasing female members and focus on female entrepreneurs.”
Anecdotally, though, the shift has made a difference to female founders in Maine who are raising capital.
Amy VanHaren, founder and CEO of pumpspotting, a Kittery-based startup building software to support breastfeeding moms at home and work, said the abundance of female investors in the Maine Angels definitely mattered to her success at raising capital. In 2020, VanHaren raised a $537,000 seed round, which included several Maine Angels members.
“I’ve found that there is a wide gap sometimes between understanding and actually investing, and the more investors in the room of a similar gender or background who have a real appreciation of the problem we are solving and our product impact, the more investment we receive,” VanHaren said. “We have great Maine Angel investors of both genders, but the female investors have been our biggest champions and helped to enthuse and incite others to come on board.”
A male-dominated field
Angel investing has long been—and still is, based on the data—a male-dominated activity. But the share of angel investors who are women is rapidly increasing.
Nationally, only five percent of active angel investors were women in 2004, a number that had grown to 29% by 2019, according to the Center for Venture Research at the University of New Hampshire.
There are six reasons why women’s investing remains low, according to research by the Kauffman Foundation.
- They don’t know about angel investing and its opportunities
- They are not solicited to invest
- They feel ill-prepared for angel investing
- They are risk-averse and avoid this risky asset class
- They do not have the right network of angel investors
- They are not exposed to vetted deal flow.
Stone and Susan Morris, who joined the Maine Angels in 2013 and quickly partnered with Stone to recruit more women investors to the group, faced these barriers head on. One of their first steps was simply “going public” as active angel investors.
“Many angels, and women in particular, tend to be private about their investment activities,” Stone said. “People cannot be what they cannot see.”
Stone has focused on and building onramps and creating networking and educational opportunities for new and aspiring female investors. She created the Maine Women’s Investor Network, or ME WIN, which is a local chapter of the Northern New England Women’s Investor Network. The group’s goal is to increase the number and expertise of female investors, and to close the gender and diversity gaps in angel funding.
Stone and Morris’ efforts have attracted new members to the group like Anna Ginn, who spoke to MSI about her recent experience with angel investing.
Ginn returned to Maine a few years ago after a successful career in New York City.
“I came back with the intention of being an impact investor,” said Ginn. “However, I found it surprisingly difficult to make investment decisions with my own money, despite having experience conducting due diligence with Nat Henshaw at CEI Ventures. When I joined Maine Angels, I had access to more experienced investors and the collective knowledge base of the group.”
“I was initially more interested in the environmental, social and economic impact of investments, however, my recent investments have been in companies that are more technical than I may have initially predicted,” said Ginn. “Maine Angels has helped me understand new markets and new technologies.”
Ginn recently invested in VETRO, the Portland-based developer of cloud-based broadband mapping and fiber management software for the telecommunications industry and in Bolt, a Colorado-based medical device startup developing a surgical navigation system.
Investing in female founders
The number of female investors at the table has been shown to impact the amount of venture capital that flows to female founders, which remained a paltry 2.3% in 2020, according to the Harvard Business Review.
This gender funding gap is one of the things that motivates Stone and Morris to increase Maine Angels’ contingent of female investors.
“When I joined the group in 2013, I remember hearing that 3% of VC monies went to female founders,” said Morris.
“Some will fight their way there and win, but so much more welcoming to be invited, encouraged and supported to become a successful founder of a scaling venture.”
Women tend to invest differently. According to a HBS angel investor study, 51% of female angel investors consider the gender of business founders to be important when making investment decisions, as compared to six percent of men. Simply put, women invest more in women.
“Certainly it’s a more welcoming environment for female founders who are pitching their business,” said Morris.
Stone and Morris believe their growing ranks of female investors will ultimately benefit the local startup community by making it easier for female founders to raise capital.
“Some will fight their way there and win, but so much more welcoming to be invited, encouraged and supported to become a successful founder of a scaling venture,” Stone said.
Nationally, the number of women-led startups seeking angel investment has grown from just 4.7% in 2004 to 27.6% in 2019, according to UNH’s Center for Venture Research. Of those female founders, 12.5% of them in 2004 received investment while the share of female founders seeking angel investment in 2019 was 21.4%, according to the center.
In 2020, 23% of Maine Angel’s investments went to female-led businesses. However, because of how the group recorded past investment data, Stone wasn’t able to provide a percentage of investments that went female founders for past years. So it’s too early to tell what impact Maine Angels’ growing ranks of women will have on the local startup community.
Increasing the share of VC dollars flowing to startups with women on the founding team is not just about reaching gender parity—it’s actually a good investment strategy.
In a study of more than 350 startups, Mass Challenge and Boston Consulting Group determined that businesses founded by women deliver higher revenue—10% more revenue over a five-year period versus all-male founded startups.
The Kauffman Foundation also found that private technology companies led by women are more capital-efficient, achieving 35% higher ROI, and, when venture-backed, 12% higher revenue than startups run by men.
Despite the strong financial performance, investments in companies founded or cofounded by women averaged less than half of that invested in companies founded by male entrepreneurs.
The Maine Angels had two female founders pitch the group at its April meeting, both of which have gone into diligence with at least 20 members showing enough interest to want to “observe” and learn more, according to Stone.
Stone says the group has a target of a minimum of 25% female-led deals, which requires looking at more female deals and finding good deals to invest in that are led by women.
To that end, Stone encourages interested women who meet the designation of an accredited investor, to roll up their sleeves and get started.
“We are stronger as a group, and the community is driven to help new investors learn,” Stone said.
A great way to start is to join ME WIN or reach out via mainewininfo@gmail.com.
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