Businesses are missing out on huge commercial opportunities due to a lack of gender diversity in early stage business investment. This is the message from experienced investor Roxane Sanguinetti in our latest Meet the Investor interview. Tackling the gender funding gap was her motivation in joining Alma Angels, which backs female and/ or minority founders. It is now 350 angels strong. As well being an investor with Alma Angels she is co head of the London chapter of Women in ETF’s.
In a wide ranging interview she discusses how to create a more level playing field, why it matters, the sectors that she is drawn toward investing and the common qualities of founding teams she has backed. Why dedication is what you need…
What led you to angel investing?
A few years back I was advising start-up founders on their fundraising decks and financial models, as I had realised it could be helpful to those who do not have a finance background. I kept coming across some very interesting business models and I started thinking “oh I wish I could invest in that one!” but I lacked confidence. I started with a few investments via crowdfunding in businesses I had met or supported, but I wanted to get more involved.
I went looking for an angel community, or mentors who could guide me. One thing I knew for sure, I wanted to focus on female and/or minority founders. And that is exactly what I found with Alma Angels. December 10th 2019, I attended the first meet-up where we exchanged ideas on how to support female founders. Now 3 years later, we are a community of 350 angels who have collectively invested a few millions, and I’ve had the opportunity to learn alongside some incredible people.
You back businesses (co-)founded by women. What drives you to do this?
I want to see more wealth in the hands of women, be it on the fundraising side or the investing side. And these go hand in hand.
We have all seen the horrendous stats – only about 1% of VC funding goes to all-female teams. There is a fundraising access gap for female-led businesses, and I have pledged to bridge that gap by investing and introducing the founders to my network. I also spend a lot of my time educating on angel investing. Women are more likely to back women, but less than 15% of angel investors in the UK and Europe are women. And this isn’t about charity, research shows that investments in female-founded start-ups perform better than in all-male teams. Ultimately, we want to create a virtuous cycle: successful exits to bring more wealth to reinvest.
I want to do everything that’s in my power to better the ecosystem and level the playing field.
From a business perspective, what are the benefits of ensuring we have more gender diversity in the start up ecosystem?
There is now a lot of research and data on the financial benefits of diverse leadership teams. Businesses are potentially missing out on opportunities and revenues from half of the market when products and services are not adapted. One sector I know well is WealthTech: Over the last few years, we’ve seen an explosion of businesses such as roboadvisers and trading apps. What all these apps have in common is that women are rarely involved in building and testing, and it now shows in the user base. 70 to 90% male. Which is an opportunity for female-led businesses to come in and make a killing.
To build long-lasting inclusive technology AND businesses, we need diverse teams involved in the whole process – from ideation to development, testing and distribution. And by diverse, I mean gender-wise, racially but also cognitively.
And if I can expand the question to the investing landscape: diverse investment teams will back a more diverse portfolio of founders, which is beneficial in terms of returns but also means that they are more likely to support builders of inclusive technology.
What sectors particularly interest you for investment?
I am naturally drawn to FinTech and WealthTech due to my background. I understand the pain points and I feel that I can be more helpful to the founders. However, now when I look back at my investments, they are all from various sectors (I added Sexual Health, Recruitment, Impact…) but they all have in common that they are making the world a better place for women and minorities! And as new sectors emerge, my curiosity gets tickled. I have recently been looking more into web3 businesses.
What are the successful traits and tactics of founding teams you have backed?
I think my founders all have in common an insane sense of dedication. They are so incredibly passionate about their cause and are the most hardworking people I have ever seen. They have all brought in impressive results with limited financial backing. A successful founder can also be one who realises their own limitations and know when it is time to sell or to step away from the business, even when it does not maximise their profit, but it ensures their team and the business can carry on.
Female investors are twice as likely to invest in women than male investors. What advice would you give to those interested in getting into investment for the first time and getting active?
Ask loads of questions and ask for help from experienced angels – what do they look at? What questions do they ask during due diligence? From my experience, angel investing is a collaborative environment. I am yet to meet an angel who hasn’t been open to discussing their journey or their investments. Angel investing is a game no one plays on their own, as we are there to support the founders through their early fundraising journey so we coinvest, we help each other out, we connect with later stage investors. As a first step, joining a community or a syndicate can be of great help for those who feel they need an organised structure. You get to ask your questions in a safe space and see dealflow more easily. By the way, Alma Angels is 70% women.
Does the current national and global context, and the outlook of an increasingly uncertain world change your investment thesis?
I wouldn’t say that it changes my investment thesis. Female-founded businesses generally have had to build with very limited funding which tends to make them much more resilient, much more cost/ cash-burn conscious. BCG released a report stating that female founders generate twice as much revenues per dollar invested than male counterparts.
What has changed however is the way I look at the business models. I might focus my due diligence questions on some risks that seem more prevailing due to current market conditions.
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