Despite women in the UK owning 45 percent of the wealth, only 14 percent are business angels. This low percentage persists in the number of entrepreneurs as well. With the theme of the year being #BehindEveryGreatCity, it’s important to highlight the women that have been stepping up to make a change in these low percentages. Jenny Tooth, the CEO of the UK Business Angels Association, speaks with us about her journey through the angel investment industry and how she is utilising her position to encourage more women to invest.
Tooth’s passion for small businesses began while she was studying for her master’s in economics. ‘The most important issue that I saw was in finance. I picked it up early in my own observations and then started on how I could get involved,’ said Tooth. With this, she set up her own consultancy in which she focused on small businesses accessing finance, specifically public funding from the government.
After working closely with the European Commission in Brussels, she began to identify an important area of finance: business angel finance. ‘Public money is very valuable and important; however, private investments bring in more than just money. Small businesses can also receive help and expertise from investors.’ Tooth went on to work with the London Business Angels and then co-founded Angel Capital Group. In 2002, she dove into the world of angel investing.
Women in the Angel Investment Industry
When asked how the angel investment industry has changed in terms of women’s participation, Tooth replied, ‘When I first started, there were hardly any women. Still now, there aren’t many. We know that if we had more women engaged in angel investing, then there is a very strong likelihood that female entrepreneurs could access angel equity.’
Understanding this gap in the industry, Tooth has utilised her position with the UKBAA to get more women involved. The research was carried out amongst 700 women, with 200 of them being from the UK, to understand what the barriers and drivers are for women investing. Those drivers included:
· Lack of awareness
· Lack of role models
· Lack of case studies that highlight successful investments made by women
· Lack of opportunity
· Busy juggling their lives
‘Women investors need better resources where they can easily find entrepreneurs to invest in.’ One of the efforts being made by Tooth is a new e-learning program that is being launched through UKBAA. ‘It is aimed at all angel investors, but there is a strong focus on women angels. We interviewed eight women angels to get their tips and advice.’
The Challenges and Advice of a Woman Leader
When asked what is the one challenge that Tooth has faced as a woman leader, she responded with, ‘Time.’
‘We as women are massive multi-taskers and are always trying to do it all. We need to take a bit more time out and have time to restock and regroup. We try to run a lot of things at once and try to give 100 percent to all of it, but it’s important to remember that “me time” is important.’
Comparing Men and Women Investors
When analysing businesses for investment, men and women look at varying aspects of the business.
‘I think as women, we look for the backstory,’ said Tooth. ‘We want to know “Why did you set this business up? What was the story behind this? Why this business? Why this time?” We want to feel that there was a real rationale and need behind it.’
Men investors, on the other hand, tend to look more at the business model and the technology. There is a strong emphasis on the finances.
Both men and women investors will focus on the entrepreneurs and what drives them as well as the market share and scalability.
‘I would generally say that most women like the idea of getting engaged with the business,’ said Tooth. ‘That’s especially why we help women founders when we can. We can understand things that they have been through. We have more of an instinct on the nurturing side.’
Overall, women and men investors complement each other. According to Tooth, investment in syndication and diverse syndicates pull the best out of men and women.
Advice to Young Female Entrepreneurs
To succeed in the industry, Tooth says that it’s important for entrepreneurs to talk about all that they have achieved.
‘Talk about the traction, and don’t be afraid to really help the investors understand how much you have already achieved and what you have personally put into it.’
In addition, entrepreneurs should spend some time studying their competitors and creating a plan on how their business is going to be different. ‘Investors are aware that there are similar things and may have invested in them, and they need to understand how you are doing something different.’
Finally, according to Tooth, it’s important to bring other good people around you. ‘Always bring mentors and advisors around you. Build a good group that you can always turn to help for information and guidance. These experts will allow you to make further connections and can act as your sounding board for your ideas and challenges.’
Why the UK is a Unique Place to Invest
The UK has experienced huge government support with the SEIS and EIS tax breaks. While other countries have brought in tax breaks, they are less than those of the UK and are not as wide-ranging.
The government has also created co-investment funds, which leverage angel investing by bringing in additional firepower.
Amongst this government support is a connectivity between all players in the finance ecosystem. ‘Angels, VCs and crowdfunders all talk to each other. There is much less cohesiveness elsewhere. We have a community that talks to each other, shares deals and builds deals together.’
Overall, there is a strong environment and support system for startups in the UK. ‘We are attracting many more funds to the UK that are coming from all parts of the world, particularly from a scaleup side,’ said Tooth.
‘There will be a lot of countries in Europe that will try to compete and attract investors and entrepreneurs. I think we have a very strong environment that I hope will continue to grow and thrive in both entrepreneur and investment perspectives.’
Connect with Angel Investment Network, along with top VCs, crowdfunding platforms, accelerators and more, at our ‘Networking with Funders’ event! Join us on Tuesday 20 March 2018 at WeWork Aldwych House for an evening (18.00 - 21.00) full of opportunities. Secure your ticket here.
For further information on angel investment, visit www.ukbaa.org.uk.
Follow BFS and UKBAA on Twitter @bizfundingshow and @UKBAngels.