Angels: The Key to Economic Growth in the UK, US & Canada?
Canada's history of investment began as early as 1907 when the United Kingdom (UK) and the United States (US) invested in Canada to help fuel economic growth.
Fast forward to 2012 – women entrepreneurs are now fuelling economic growth in Canada, the UK and the United States.
In Canada, the number of women owned businesses is growing 60 percent faster than those run by men. In the US, female owned businesses make up 16% of the total of US employment. It's predicted that women starting businesses in the US will generate approximately 33 % of 5.5 million new jobs by Bureau of Labour Statistics by 2018 according to The Guardian Life Research Institute report. In the UK, the number of women starting businesses increased by 16 % between 2008-2012 compared to 2% for men. (ONS statistics to April 2012).
It's key to understand how important the success of women entrepreneurs is to each country's economic growth.
To reach success, women entrepreneurs must be supported with start up money. There's many ways to access money to start up a business. Yet, since the economic downturn (2008) banks have been reluctant to issue loans for new business start ups and venture capital firms are now targeting later stage companies. In addition, past historical evidence states women have had a harder time to access money to open a business. The investment community in Canada reported they may not be able to meet the demand from start ups and provide the cash needed. So, it is crucial to develop alternative investment channels.
Business Angels and Angel Funds
In Canada, US and UK, business angels and angel funds are becoming the solution for early stage business owners. These Business angels are simply wealthy people looking to invest in private companies whereas angel funds are groups of individual investors who meet and consider investing in a business.
These business angels and angel funds are predicted to be the alternative investment channel needed to spur economic growth.
Angel investors traditionally have been male, retired CEO's, or entrepreneurs interested in investing in a business. There have been many efforts to break away from this stereotype in both the US and UK. With groups from both countries encouraging more women to become angel investors but many suggest that there is more to be done.
Female Angels: the numbers
Of the angels currently available for entrepreneurs it's interesting to note what percentage make up female investors. Women make up only 5 percent of the angel investors in Europe and 13 percent of the angel investors in the US as reported by the Organization for Economic Cooperation and Development. The numbers are very low.
In the UK, Jenny Tooth, Business Development Director of the British Business Angels Association, says,
“Despite the high number of successful business and professional women in the UK, and women accounting for nearly half the millionaires in Britain, currently only about 5% of Business Angels in the UK are women investors.”
Once again, women make up a very small percent of the business angels.
If more women became angel investors, more money would be available for women starting up businesses and with this fuels economic growth. There are groups working hard to engage women in angel investing in the US and Europe to break the shattered box and stereotype image. An emergence of angel investment firms that target women entrepreneurs in the US and UK can be found, but not in Canada.
Golden Seeds, Astia and other women investment groups
In the US, Golden Seeds is an investment firm dedicated to delivering above market returns through the empowerment of women entrepreneurs. There are 250 men and women investors in its' network. Founded in 2004, headquartered in New York with offices throughout the US and deemed to be the fourth largest angel investment network in the United States.
Deborah Meaden is the best known UK female business angel for investing in businesses that are ethical and green. Meaden is part of the estimated percentage of female angels at just 5 % of the total number of female investors in the United Kingdom.
The UK has groups trying to increase women investors and funds directed to women starting up businesses. Incito Ventures is an investment club for women who want to invest in female led start ups in the UK. Addidi Business Angels is another group that is a women only angel investment club with about 20 to 30 female investors. Each female investor commits to investing 20,000 pounds in small growth companies.
In addition, Astia is a group located in the US, UK and India. This group helps women access the networks and expertise that high growth women entrepreneurs need. They support companies that have high growth potential and at least one woman in a leadership role. Astia was founded to address the issue of women's access to capital as women entrepreneurs are statistically less likely to be funded. Even, in the countries Astia works with there is a low percentage of women investors with 95 % of the Venture Capital partners male and 85 % of Angels being male.
Angel investors in Canada
In Canada, there are currently no angel funds directed solely on women start ups. The Maple Leaf Angels just recently stepped up to work with Canadian Women in Technology to create investment opportunities between angels and women led start up companies in technology.
In addition, in Canada, Vincent Gasparro, managing director, Green Tomorrow Fund of Toronto, Canada says about 60 percent of the businesses he invests in are either 100 percent female owned, operated or some part owned by a woman. He says the glass ceiling for venture capital financing for women is 'beginning to shatter.'
The numbers speak for themselves as women led businesses continue to steadily increase in Canada, the US and the UK with or without an angel investment. It's also important to applaud both the US and UK for having Angel funds focused on women in business and recognize them for these advancements.
With the high number of successful business and professional women in the UK, US and Canada more female angels may emerge and change the historical stereotyping of our current angels.
Lana Larder founded Halifax Finance Inc. in 2008 in Nova Scotia, Canada after seeing how difficult it was for business women globally to access financing to open or grow a business. Larder is currently working on founding the first angel fund for women starting up businesses in Canada. She is a huge advocate for women in business and wants to “shatter the glass box” and break the stereotyping of angels and angel funds in Canada. Larder is a published author and has been recognized with local and national awards for her entrepreneurship and leadership.
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