Barriers for women investors still aren't budging, but change is coming: report

The National Angel Capital Organization (NACO) released its annual Report on Angel Investing last month, highlighting angel investment activity across Canada in 2019. The Report tracks the regions, industries, and size of the companies on the receiving end of more than $160 million in venture capital last year, as well as the impacts, organizational structure and demographics of NACO itself.

Among other trends, this year’s report notes that women comprise just 17% of the organization’s membership, 3% higher than 2017, but unchanged from 2018 (17%). While the report observes that this number is consistent with international standards, which range from 4% to 20%, it comes at a time of increased national and international scrutiny of the makeup of both providers and recipients of angel investments. One European study found multiple barriers to entry for women entrepreneurs looking to invest in startups, including a lack of guidance in choosing solid opportunities, lack of information on the process (often they were not informed by financial advisors about the ins and outs of angel investing), and lack of female peers or role models in the industry.

Amanda Filipe, director of NACO’s National Initiative for Women Entrepreneurs, acknowledges the reality of the situation, but remains optimistic, stressing the importance of both women investors and women-owned businesses: “By working to address these barriers and connecting more women to the angel investment ecosystem, we can unlock new capital to drive economic growth, creating jobs in our communities and providing women with a powerful opportunity to participate in the innovation economy.” The National Initiative for Women Entrepreneurs is part of a slate of women-focused initiatives introduced by NACO in recent years, including Female Funders, an angel investment training program for corporate and technology executives. This kind of commitment, she continues, “is more important now than ever before, as we look towards economic recovery and the impact of the COVID-19 pandemic.”

The research on whether women investors tend to invest more in women-owned businesses is mixed – though observers have reported on the ways in which female representation among angel investors can help create a more accessible environment for women entrepreneurs seeking funding. Nevertheless, these programs reflect NACO’s belief in the over-all importance of women-owned businesses to the economy. “So often, support for women entrepreneurs gets classified as a social project and we really need to shed that notion,” Filipe says. “Investing in women is actually a solid financial decision - studies have shown that start-ups founded or co-founded by women perform better on average and provide greater returns on investment.”

While the NACO report notes that angel investment has historically been predominated by men, Filipe looks forward to a change in the winds: “I expect we will see [the numbers] continue to rise … thanks to several contributing factors, including the emergence and growth of women’s investment networks and increased representation of women investors. We look forward to continuing this work in collaboration with partner organizations across Canada.”

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