Research shows that gender-diverse companies are 21% more likely to outperform their peers, and private tech companies led by women achieve 35% higher ROI. Yet women make up only 13% of venture capital investors, and just 6% of VC funding goes to women-only teams (13% to women/male teams).
When it comes to private investing outside the VC world, 51% of private wealth is held by women, but women comprise just 22% of angel investors. The numbers are increasing, however. Beyond traditional angel investing — which is only available to accredited investors — equity crowdfunding is opening up more opportunities for all women to invest in private companies.
To encourage more women to get started with their private investing journey (and kick off Women’s History Month), Republic hosted our first weekly Women in Investing Clubhouse Series on Wednesday, March 3. Over 1000 listeners dropped in to hear a 2.5-hour talk with seven expert women investors. Here are the top five takeaways from our event:
1. PLAN ACTIVELY AND ENGAGE DEEPLY
The key to getting started, according to our panel, is to think about both your investment thesis — that is, what types of opportunities you want to invest in — and “what kind of investor you want to be,” according to Seble Tareke-Williams, Consultant at the Vanbarton Group (a fully integrated commercial real estate investment advisor and manager) and member of Pipeline Angels.
Tareke-Williams pointed out that in some of her investments as an angel, she participates in syndicates alongside other women and contributes to the due diligence process – which is a more active approach than making, say, a passive investment in a real estate deal. It’s important to understand the difference, and explore different options available to you.
“Learn as much as you can. There are a tremendous amount of resources out there,” said Lorine Pendleton, an attorney and VC at Portfolia Rising America Fund. “Do your research on what areas you want to invest in. Look at industries and what kinds of things are expected to be big trends.”
2. SEEK OUT COMPELLING OPPORTUNITIES
Private market investments run the gamut from small-dollar investments (in the tens, hundreds, or thousands) via equity crowdfunding to the $10,000-$25,000 investment floors that are required among some angel investing groups. Common investment vehicles include tech startups or real estate offerings; investments in arts or cultural programs are also available to certain angels.
“Anything you’re passionate about you can find investment opportunities in, not just startups,” Randi Zuckerberg, who invests in both theater shows and IT, told our audience. (Zuckerberg is an active angel and a current Republic advisor, as well as Founder and CEO of Zuckerberg Media and the former Director of Market Development at Facebook.)
Researching opportunities also means recognizing the level of risk involved each one. Most private investments are inherently risky, and most startup and real estate investments tend to have 5-10 year (or longer) time horizons.
3. LEARN EVERYTHING YOU NEED TO INVEST WITH CONFIDENCE
The high levels of risk and lengthy time horizons of private investments make it all the more important for investors to feel confident in their decisions — especially when it comes to the industries and founders they support.
Once you find opportunities you’re interested in, learning as much as you can about the founders and their goals is essential to being comfortable investing any substantial dollar amount. Janine Yorio, Co-head of Republic Real Estate and former CEO at Compound, told listeners that having the courage to ask questions is an area where women sometimes struggle in their early investments.
“It’s important to invest in things you know and understand, because it’s really up to the founder to make sure their opportunity makes sense,” said Yorio. “If you can’t understand it, the person explaining it is probably not the person you should be investing in.”
“If somebody’s asking or expecting you to write a check, you need to ask all the questions you need to be comfortable with that investment,” said Yorio.
Of course, investors don’t always get every answer they want. Private investing is about getting in early on opportunities with potential returns down the line, but no one involved — founder or funder — can predict the future.
“No one knows exactly where a company is going,” said Shaherose Charania, Operating Partner at Nike Valiant Labs, Advisor at Republic and EniacVC, and Co-founder of Women 2.0 and Founder Labs. “The founder is building that future. So while you have every right to ask questions, know that you don’t need to know everything to start. It’s just so important to get started.”
4. PUT YOURSELF AND YOUR INVESTMENT IDEAS OUT THERE
“Find companies you’re interested in and stalk them,” Shaherose Charania advised new angel investors. “Start by being proactive. There are so many interesting companies out there that might be interested in taking checks. Just reach out and tell them how you can add value.”
Charania told our audience that it’s up to each aspiring angel to “work on your unique value-add if you want to be that kind of investor.” So what does that mean?
“Part of it is growing your personal brand and putting yourself out there as an investor in the areas you want to be in,” says Lisa Carmen Wang, Head of Brand Communications at Republic and Founder of SheWorx. “It takes being vocal, finding the rooms where people are talking and speaking up. Put it out there that you’re looking for certain investments and more will come to you.”
It can also mean partnering up with angel groups or joining equity crowdfunding platforms that vet projects aligned to your interests. From there, it’s about building a portfolio — not just making a few one-off investments.
5. BUILD AND GROW A DIVERSE PORTFOLIO
“A lot of women make one or two investments, don’t see returns, feel burned, and don’t come back to investing,” said Randi Zuckerberg. “One or two won’t work. When you’re investing in any asset class, you have to take a portfolio view.”
A goal of 10 or more investments, at dollar amounts you’re comfortable losing in the event you see no returns, is recommended. The more opportunities you invest in, the greater the likelihood that one or more will deliver returns.
“By making small-dollar investments as an angel or by using equity crowdfunding, you can build a portfolio of 50 or more private-company investments,” said Janine Yorio. “People will think you’re a millionaire,” she joked, “but you don’t have to be in at the $10,000+ level to be invested — you can be in at a few hundred or a few thousand dollars apiece.”
Getting in early on private investments, regardless of the dollar amount you invest, can be a rewarding journey.
“It’s different to see updates from a founder about a private-company investment than it is to get them as a public-company shareholder,” said Seble Tareke-Williams. “You know your contribution made a difference.”
IN CONCLUSION: KNOW YOU CAN MAKE A DIFFERENCE WITH YOUR DOLLAR
Your contribution makes an even bigger difference when it’s invested in women and minority founders.
“It just makes business sense to invest in diverse founders,” said Tareke-Williams, noting the higher population growth of non-white Americans in recent years. “It’s a business imperative, not just a moral imperative.”
Investing is about “helping create the world we want to see,” says Randi Zuckerberg, which is one that should include representation of — and products and services for — women and families. Ultimately, that starts with funding women founders.
“We’re at this point where there’s a movement [around women in investing] happening,” said Pialy Aditya, angel investor and Chief Strategy Officer of Republic. “I think it’s just our time.”
At Republic, we’re keeping the movement going by continuing the ‘Women in Investing’ conversation. Catch our next talk on Clubhouse this Wednesday, March 10 at joinclubhouse.com/event/PAaaQa6e.
Disclaimer: Investments in private companies are particularly risky and may result in total loss of invested capital. Past performance of a security or a company does not guarantee future results or returns.