Angels seeking more women as investors

On lookout for those interested in putting their money, experience to work

Categories: Business, News, Opinion

Serial entrepreneur Dick Frederick says the seed-capital fund he runs with retired banker Joe Richardson is ready to start raising a third round of money to help early-stage companies get their sea legs.

And as it has done before, the Eastern New York Angels will be on the lookout for women interested in putting their money and experience to work in guiding the young firms.

The seed and venture capital communities have had their knuckles rapped for the dearth of women on both sides of the funding equation: as deal-makers and as deal recipients. Academics and trade groups have taken notice.

The Center for Venture Research at the University of New Hampshire, which tracks the start-up, or “angel,” investor market, said in its latest annual report that women comprised 25 percent of angels in 2015, a slight decrease from a year earlier.

In the venture capital world, women represented 45 percent of the VC workforce last year but few — just 11 percent — were in partner or decision-making positions, according to a survey released by the National Venture Capital Association and consultant Deloitte.

What do the data mean? That with fewer women controlling the purse strings, fewer women-run firms are on the receiving end of a seed or larger investment.

The Center for Venture Research computes what it calls a “yield rate” — the percentage of presented investment opportunities that result in an investment. In 2015, the yield rate was 18 percent.

But the center noted that the yield rate for female entrepreneurs had been steadily declining for four years. “This, combined with the relatively unchanged percentage of women angel investors, may indicate the need for more women investors in the angel ecosystem,” it said.

Meanwhile, a 2014 study out of Babson College reported that venture capital firms with female partners were twice as likely to invest in companies with a woman on the management team and were three times as likely to invest in companies with female CEOs.

Venture and seed investing have long been regarded as a “male-dominated sport,” Frederick told me this week. “But it doesn’t have to be.”

He noted that Eastern New York Angels has four “very active” women as investors/mentors, who “jumped in with both feet.”  They joined on their own or with a spouse; all investors need to be “accredited,” meaning they are wealthy enough to weather any loss of investment.

Frederick said he doesn’t look at whether a firm seeking an investment is male- or female-owned. Rather, “it’s the opportunity” the investment presents.

The fund has put money into two local start-ups run by women, Vital Vio of North Greenbush, which uses light to disinfect bacteria-filled environments, and Glauconix of Albany, which replicates a filtering tissue in the eye that can be used to test potential glaucoma drugs.

Frederick describes both as “game-changers.”

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected].

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