The angel investment world is still overwhelmingly male. Data from the UKBAA suggests only 13% of business angel investors in the UK are women and it is a similar picture worldwide. Lack of access is one of the biggest challenges of gender inequity. There is an urgent need for more successful women to speak up and show others the way. One of the key reasons is that more female investors means more female entrepreneurs are likely to receive support.
One such woman is the incredible Marla Shapiro- CEO of HERmesa – a UK based angel syndicate, 2022 finalist Angel Group of the Year at the UKBAA awards, investing in extraordinary female (co) founded start ups. We speak about her continually growing portfolio of exceptional women led start-ups, her drive to support female backed business and what she sees as the fundamentals of a founding team.
What has led you to angel investing?
I find angel investing incredibly interesting! You have the opportunity to meet fantastic entrepreneurs, learn about new technology / products / scientific innovations and, to play a small role via your capital and expertise in making these innovative businesses a success.
You back businesses (co-)founded by women. What drives you to do this?
I invest in women-(co)founded businesses because women founded companies return more and generate greater returns to investors. Angel investing is about making money: you make more money investing in women founded businesses and alongside women investors.
At HERmesa, we call this the “diversity dividend” and share the underlying data on the performance of women funded and founded startups via our website.
You operate as a syndicate, with the aim of not only supporting female founders, but also increasing the number of female investors. Why is this important to you?
The statistics about women investing and receiving early stage financing are dire: 13% of the angel investors in the UK are women and women (co)founders receive 5% of early stage financing. This means that the world is being built by men to meet the needs of men. If women do not have a seat at the table to invest in companies of the future, we get a reduced range of products & services. If all investors are the same (e.g. white men from the southeast of the UK that work in the City), how are we going to get solutions that meet the needs of the entire population!? If you don’t invest, you are letting someone else build your future.
And, if women don’t invest, they are excluded from private wealth generating opportunities vs their similarly situated male peers. While angel investing is risky, with an appropriate portfolio strategy and risk management, you can generate meaningful returns. Why should this be available only to men?
Finally, while I don’t think it is the responsibility of women investors to solely solve the lack of funding that goes to women entrepreneurs, it is true that women investors back women founders at a disproportionate rate (~40%) vs their male peers (~2%).
What do you do to support more women to become angel investors?
HERmesa angel syndicate does a lot to bring new women into angel investing! We support new angels in a variety of ways:
- Ongoing education sessions on all topics re: “how to angel invest”
- “Buddies” – pairing new angels with experienced angels to ask ‘silly’ questions (even though there are no silly questions! And we work really hard to create an open, curious culture at our events)
- Setting a very low minimum ticket size of £2k/deal. This low ticket size allows new investors to dip their toe in the water with a limited amount of capital at risk vs the typical syndicate which requires a £10k minimum ticket. HERmesa are huge believers in “learning by doing”. You can’t be an angel investor unless you invest; and you can’t learn by reading about angel investing. The best investors learn from experience and by having ‘skin in the game’.
- We have found that the lower ticket size is not just attractive to new investors, but also to investors earlier in their careers, including entrepreneurs who have not yet exited their business. This low ticket size lets HERmesa bring a huge amount of talent, expertise and support to our investee companies, and from these ‘operators turned angels’ we are becoming known as high value add investors for founders.
What is your most active area of interest?
HERmesa is sector agnostic; we invest in consumer product, technology and deep science companies operating across B2C and B2B. (This IS a wide range; fortunately, we have a fabulous community of investors who are sector experts and help us review all deals). But, one theme that tends to run through our investments is “impact”: solutions to the climate crisis, pollution reduction, access to justice, etc. At least 50% of our businesses address impact in some way.
What characteristics do you look for in a founder/founding team?
When I first started angel investing, I found it immensely frustrating when experienced angels would tell me “great founders have a special something; you know it when you see it”….but, having now met hundreds of founders, I think it is true! But, to break this down, I would say that great founders/teams:
- Have strong founder/product or market fit. Ideally this means that you have deep experience in a sector that has led you to creating an innovative product and that you have the network to find the first paying customers. Or you have some killer functional experience that will allow you/your team to out-execute others.
- In addition, we look for thoughtful people who ask for advice. Founders get a lot of advice; not all of it valuable! But, knowing when to put up your hand and ask your investors for help and the maturity to weigh the responses goes a long way towards building a successful company.
- Finally, we really try to invest in nice people. We are putting our own money into the business and we are going to be with these founders for the next 3, 5, 7 years. Life is too short to invest in jerks!
What turns you off on a pitch deck sent to you and why?
Small font where everything is crammed onto the page. Investors want a super clear, concise story that gets us excited to ask more questions and set up the first call. As one of our members says, “pitch decks are meant to be commercials, not novels!”
What has made the biggest difference among your successful investments – traits or tactics that have made the biggest difference in the startups?
The best startups are characterised by really strong founders, who have the ability to hire top talent / top performing teams. As well, our best companies show flexibility and adaptability in terms of doubling down on things that work, stopping doing things that are not working and a willingness to change the business model if necessary.
As a serial entrepreneur yourself, what is the one piece of advice you would give to your younger self starting out on your journey?
Try to see failure as a growth opportunity; not just as a crushing disaster! I once was told to write a “CV of failures” and it was the best thing I ever did. Only by looking at where I failed, where I was fired, where I didn’t get a promotion was I able to see the doors that then opened up. If I had succeeded at my first job, I would never have taken all of the other steps that led me to becoming an entrepreneur and investor today.
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