Significant growth in number of women business angels in the UK
There has been an increase in the proportion of women business angels in the UK, a survey has found.
Some 12 per cent of respondents to the survey, which was conducted by Professor Colin Mason and Tiago Botelho, a doctoral student, from the University of Glasgow’s Adam Smith Business School, were women, a significantly higher figure than reported in previous studies undertaken over the past 20 years.
This increase parallels trends in the US. However, women business angels are more significant in the US, accounting for around 20 per cent of the total.
These survey findings are reported as the European Business Angels Network (EBAN) prepares for Business Angels Week 17-23 November 2014, the world’s largest cross-border angel investment awareness initiative featuring Business Angels and Entrepreneurs from Europe, the Middle East (MBAN) and Africa (ABAN).
On average the women who responded to the survey started investing five years ago (2009) compared with ten years (2005) for men. This is further evidence of the recent growth in the number of women business.
Given their relatively recent history as business angels it is not surprising that women are less experienced investors than men:
• 44 per cent of women have made between one and three investments, compared with 20 per cent for men
• 37 per cent of men had made over 10 investments compared with just 7 per cent of women.
Driving the overall growth in business angel activity is the opportunity to invest alongside others in organised and managed angel groups. 82 per cent of women are members of one or more groups (average 1.6 groups), marginally lower than the proportion for men (86 per cent). Some groups have been established as women only groups specifically to encourage more women to become angels. Women and men were equally attracted to join angel groups for the opportunity to invest with others.
Previous research has found few differences in the backgrounds of male and female business angels. Indeed, the pioneering women angels had very similar in terms of backgrounds to their male counterparts. However, the influx of new women business angels is changing this.
• Women angels are now slightly younger, more likely to be in the 45-54 age band whereas men are more likely to be in the 55-64 age band.
• Women angels are less likely to have entrepreneurial backgrounds, as either CEO of an SME (41 per cent have been CEOs of a small business cf. 62 per cent of men).
According to the survey, women business angels have distinctive investment criteria. Men put the product/service of the business ahead of the people running the business as the main reason for investing whereas women reverse this ranking, ranking the people as their top investment criterion. Male and female angels do however, both use similar numbers of sources to undertake their due diligence.
Angels who invest in groups are open to influence in their investment decisions from both the group manager and other angels in the group. Women were less likely than male angels to be influenced in their investment decision by the views of other angels. This was particularly noticeable amongst women who were members of all-women angel groups. This may reflect the overall lack of investment experience amongst other investors.
“The increase in the proportion of women business angels is the most significant finding from our 2014 Survey of Business Angels in the UK,” says Mason. “Our research suggests that women assess investment opportunities differently from men. Entrepreneurs need to understand this and adjust their investment pitches accordingly.”
Eileen Modral, manager of Oxford Investment Opportunity Network (OION), says: “This is encouraging news. Having more female role models in the investment world sends out a strong message, not only to other women interested in providing funding support, but to potential female entrepreneurs. I have seen an increase in women led start-up companies or part of a co-founder team, and this is an upward trend that has potential to continue.”