Sarah is an entrepreneur, NED and angel investor. In 2014 she co-founded the fast-growing and award-winning angel network, Angel Academe, which helps female founders who can already demonstrate some commercial success with their technology business access a unique pool of engaged, mainly female investors. Members are successful entrepreneurs and senior leaders who understand that diverse teams build better businesses and want to invest as part of a high caliber, experienced and collaborative network.
The 40 businesses Angel Academe has backed operate in enterprise software, fin tech, health tech, ed tech, clean tech and consumer tech. Collectively they’ve raised over £70m from angels and institutions, generated £millions in revenue and created hundreds of high value jobs.
But if you’re looking for some immediate insights, here are the three main takeaways.
1. Progress towards greater gender diversity is being made, but slowly.
Sarah: “Since we set up Angel Academy we’ve focused on female founded and female co-founded tech startups: I wanted to prove that women could build scalable technology businesses, because that was another thing that I was told by all these male investors, that women were only building niche businesses. And I thought that was hugely unfair.
My message was falling on deaf ears largely back then. Everyone was telling me that there wasn’t the deal flow of female founders. And I was saying, well we’re seeing massive deal flow, because actually, women want to pitch to other women, not just rooms of men. It’s taken a long time for that environment, the wider environment to change. But slowly it is changing. I mean, there were way more female founders, even in tech sectors than there were when we started in 2014. Although we were getting good deal flow, even then, you will see more women at pitch events now, thank goodness. So you don’t have founders just pitching to rooms full of men. And you know, we’re even seeing some female names on the cap table, they’re still in the minority. And then the other thing that’s happening in the wider environment is that venture capital firms have really woken up to diversity issues. And they’ve been very busy hiring women, mainly into junior roles, but you are seeing some women now being promoted into decision making roles as well. And that’s massive. But you know, there’s still more to be done. A lot of the bias, a lot of it unconscious, still exists. And I think until we have diversity in the investor community, we won’t get that diversity reflected in the founder community. “
2. Unconscious gender bias is a major problem, and diversity at pitch events contributes to a better environment.
Sarah: “There’s actually been some great research by Dana Kanze on how women get asked prevention questions [at pitch events], whereas men get asked promotion questions. So the questions that go to women focus on the risks and the downside, the questions that go to men focus on the opportunities and the potential for success. And, you know, definitely I couldn’t encapsulate it as clearly as that but I definitely experienced that when I was part of these male networks. So the questions addressed to women would focus very heavily on the financial aspects and quickly go into a downward spiral. So there wasn’t a single woman who got funded through those Angel networks when I was part of them.
They are tough environments, those pitch events, especially the male ones. There’s a lot of testosterone and competitiveness and they’re not hugely supportive. And that’s not to say that you don’t have to be tough to be a founder: this isn’t for people with thin skins and fragile egos, you know, you will go through the rough and tumble, you’re asking people for their hard earned money after all. But they’re not environments that help women thrive. And what I have noticed at Angel Academy pitch events is that the questions are incredibly thoughtful, incredibly thorough, that diversity in the room is really important to bring out the best in any founder, not just not just women.
Now we know what the problem is, founders are developing strategies to come back with better answers. So they’re not letting themselves be taken down that negative spiral. Partly founder education has got to kind of help women deal with these questions. But also, we’ve got to kind of shine a spotlight back at the investor community and make them aware of their bias, but the biggest thing that we can do is improve diversity in the investor community so and then that diversity will be reflected in the businesses that get invested. And actually, it won’t be about gender or ethnicity, will it just be about the best businesses getting funded? And that’s what we all want to see?
3. For angel investors, founder transparency is vital.
Sarah: “Founders are amazing salespeople, they’ve got to kind of mobilise good people behind their business, they got to mobilise investors, customers, everything. So you know, what goes in the deck tends to be what they want to tell you, there are things that we’ll identify in this questioning process that we might not like or other things that actually, once they’ve explained, it makes complete sense. But if they’re not willing to discuss it, that’s a red flag. If you don’t trust the people who come in early, we’re the ones that are going to have to go back. That’s a strange relationship to want to have with investors.
I think I’m much more aware of all the things that can go wrong than I was, that comes with experience, but we can give people that experience quite quickly. So new investors don’t have to learn the hard way like some of us did. I’ve learned to look at financials a lot more closely. This wasn’t an area that particularly interested me before. And I’d kind of rely on somebody else. He knew more about that to do it. But the business does need to be well capitalised, the salaries need to be under control, all sorts of things are really important. Otherwise, they will quickly burn through your money and it won’t go anywhere.”
Find out more about gender diversity in the UK startup and investing world and SyndicateRoom’s female-founded portfolio companies, in our recent publication.