Female ‘Angels’ Offer Rare Perspective
When entrepreneur Steve Streit made his first pitch to Tech Coast Angels, a group of wealthy Californians that invests in start-up companies, it was the lone woman in the room who saw the potential of his consumer product and helped him land $600,000 in start-up funds.
“The male techies in the room dismissed us immediately,” said Streit, founder, president and chief executive of Monrovia-based Green Dot Corp., which sold its first reloadable, prepaid debit card at a Rite Aid five years ago.
Today, the privately held company sells its cards through 54,000 retail stores nationwide and expects to post revenue of more than $100 million in the next 12 months.
The “angel,” consumer marketing specialist Raulee Marcus, now serves as interim chief marketing officer of the firm, using her expertise to help Green Dot, and her investment, grow.
“Long before we had interest from everybody else, Raulee just sensed that this was a product ahead of its time and would have appeal to a number of important demographics,” Streit said.
His experience is not common: Women accounted for less than 8% of the 225,000 angels nationwide who invested $23.1 billion in about 50,000 deals last year, according to a report on women and angel investing released last week by the Kauffman Foundation.
The report said the lack of female angels represented a lost opportunity -- both for entrepreneurs unable to tap a potential pool of equity and for the women, who are missing out on the chance to reap potentially above-average returns on their investments and to mentor emerging companies.
“High-net-worth women, whose numbers are growing, still are not hearing about being angel investors and are not being invited to join angel groups,” said report co-author Marianne Hudson, executive director of the Angel Capital Education Foundation, a program of the Kauffman Foundation.
Even women who are actively recruited to be angels can be put off by the jargon and the process of angel investing, she said.
Angel investors are especially important to entrepreneurs. They typically invest money in the earliest stages of a company, when it is too small to interest most venture capitalists and too risky for bankers. Although an angel often invests less than $1 million, the money can be the lifeblood an emerging company needs to survive and grow.
Because women often have backgrounds in non-tech industries such as consumer products and financial services, they can be more receptive to start-ups in those sectors, which are often unfamiliar to the typical, high-tech oriented male angel, according to the report.
“We’d like to find more women angels, although obviously we are happy to have men, happy to have Asians, African Americans and Hispanics because all of those are portals to different types of investments,” said Marcus, who was not involved with the report. “The more you open your gate to diversity, the more you open your gate to interesting investment opportunities and the ability to mentor them.”
Children’s apparel designer and wholesaler Tea Collection, a San Francisco start-up, is a beneficiary of a woman-led angel group willing to invest in a non-tech company.
Angels’ Forum of Palo Alto, which includes men and women, was the lead on a $1-million investment in the company, according to Leigh Rawdon, Tea Collection’s co-founder and chief executive. Launched in 2002, the company posted revenue of about $4 million last year. Upscale retailers Barneys and Neiman Marcus carry its internationally influenced clothes.
Rawdon credits Carol Sands, founder and managing member of Angels’ Forum, with helping the company to be successful by mentoring, making introductions and being involved in an effective manner.
“She is incredibly direct, honest, respectful and supportive without interfering,” said Rawdon, who would like to be an angel investor in the future. “Whether that is a female characteristic or not, the stereotypes would say that male investors tend to butt in more.”
Holding on to female angels is also a challenge for angel groups, according to the report. Women made up 20% of Angels’ Forum members at one point, said managing director Laura Roden, who contributed to the Kauffman report. Today, she and Sands are the only female angels in the group.
Roden estimates that, nationwide, the number of female angels has the potential to increase at least threefold. Her recommendations to achieve that number mirror some of those in the report: creating better networking for women, establishing role models and emphasizing education.
TJ’s Founder to Speak
Joe Coulombe, founder of the Trader Joe’s food markets, will speak May 23 at a free morning event sponsored by the Service Corps of Retired Executives’ Los Angeles chapter at the Los Angeles Athletic Club. Registration is required: www.scorela.org.
Cyndia Zwahlen can be reached at cyndia.zwahlen@ latimes.com.
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Start-up funding
To learn more about female angels and angel investing:
* Angel Capital Education Foundation: For information on angel investing and a directory of angel groups, visit www.angelcapitaleducation.org.
* Angel Capital Assn.: For links to 19 California angel groups and databases of other capital sources, visit www.angelcapitalassociation.org.
* Kauffman Foundation: For the April report on women and angel investing, as well as a wealth of resources for entrepreneurs, visit www.kauffman.org.
Source: Times staff
