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Beth Rader has been a member of QCA for over five years and is enthusiastic about the benefits of angel investing for investors, entrepreneurs and the community at large. As one of the still relatively few women angel investors in the Cincinnati area, Beth recently shared a few of her perspectives with The Halo Effect.
Why are you a QCA angel investor?
The short answer is because it’s exciting to support our local entrepreneurs and the amazing new products and services they are developing. It’s also an opportunity to earn an attractive return on my investment.
By background, I’m a CPA. Over my career, some of my most rewarding professional experiences have involved advising start-up companies both large and small. Angel investing offers the same sort of opportunity. There is an incredible richness of new ideas from entrepreneurs who are very smart and very passionate.
You are one of only a handful of women members of QCA. Would you encourage women to become involved in angel investing?
Women have all the skills – analytical, strategic, technical, marketing, and interpersonal/coaching – that make a successful angel investor. Moreover, women can help make QCA an even better organization than it is today.
In addition to serving as an important source of capital to young companies, one of the key benefits that QCA offers young companies – and one that differentiates us from other investors – is the depth of experience and expertise that we can share with the entrepreneurs. Women bring different perspectives, and those diverse perspectives mean better outcomes and greater potential value!
Because of the proven benefits of diverse perspectives, QCA is now actively focused on increasing the diversity of its membership. Another of the women members of QCA, Sue Baggott, is leading that effort.
Why do you think there haven’t been more women in the group so far?
That’s a very interesting question, and one I’ve thought a lot about. I see several reasons that women have been slow to enter angel investing in the Cincinnati area.
First is women’s perception of the local angel investing landscape. Women with the experience and resources to be angel investors tend to be savvy and independent, seasoned by many years in the workforce. Women look at angel investing groups such as QCA and see predominantly men, which they associate with “Old Boys Clubs.” They’ve already “been there and done that,” in terms of working in groups where they had to fight for credibility and respect, and they aren’t interested in repeating those experiences.
There are also differences between men’s and women’s approaches to angel investing. Many women don’t fully understand the angel investing model, and they think that the threshold for angel investing is higher than it really is. But the more significant differences relate to risk tolerance and expectations. Women in general have a lower risk tolerance than men, and they don’t relate to the concept of “play money.” They invest for only one reason, which is to make money with a level of risk they consider comfortable. Also from that perspective, many women are skeptical about angel investment returns. They believe the success rate and the returns should be – and could be – higher than they are.
In order for women to consider angel investing, they need to be able to influence the issues that concern them. That means the opportunity to be actively and directly engaged in the process for selecting the investments, overseeing them, and influencing the exits. Some of these ideas could be disruptive to “the way we’ve always done it.”
What about women entrepreneurs? Do many of them seek angel capital?
Very few of the entrepreneurs that approach QCA are women, even though my perception is that QCA has funded a large majority of the requests that have come from women. So the women that do “pitch“ to QCA tend to be very effective. But overall, women entrepreneurs seem to lack awareness of angel capital as a financing vehicle.
In addition, women entrepreneurs, like women investors, seem to be leery of Angel Investors. They are reluctant to give up control to a group of men — perhaps as a result of prior negative experiences with male investors or negative reactions to behavior they’ve seen on Shark Tank.
So, what are your suggestions for attracting more women to angel investing in Cincinnati?
I think we have a tremendous opportunity right now to expand the role of angel investing in the Cincinnati area. That will require taking advantage of the potential contributions of women, as well as other diverse groups.
First, we need to educate more women about angel investing and engage their interest and intellect. We then need to make them feel welcome and provide hands-on opportunities for them to participate actively in angel investing, perhaps starting on a trial basis at an entry financial level.
On a national level, there are already many women actively involved in angel investing, including the leadership of the Angel Capital Association. Columbus has its own women-led angel capital group – X Squared. We need similar role models and critical mass here in Cincinnati, and I’m confident we can and will get there.