Flynn’s Harp: Reflecting on the impact of women angel investors

Susan Preston, one of the founders of the nation’s first women’s angel-investor group in Seattle a dozen years ago, recalls "an amazing response" to the idea of creating an opportunity for women become part of the "deal flow" that was happening at the height of the dot-com rush.

By Mike Flynn – http://www.emikeflynn.com/blog/

Preston, then a partner in a major Seattle law firm, was "doing a lot of deals, all of which included only male angels. I started talking to friends about whether or not it bothered them that women didn’t seem to be getting the same chance to be in early on these deals. It did."

More than 150 women attended a first meeting in 1998 to explore the idea of creating an angel group for women. With major support from women executives at the family-owned Laird Norton Co., Seraph Capital Forum was formed with a dozen women as launch members and more than 50 joining during the first year.

Janis Machala, another in the Seraph founders group, had launched Paladin Partners in 1996 and served as advisor and mentor to start-up companies, often as interim CEO, COO or board member. She says she "saw firsthand the need to grow our angel population."

"There was a lot of wealth in this region at the time and some of it was coming to women," recalls Machala, who has just finished a stint as director of Launchpad Services at the University of Washington Center for Commercialization. "We wanted to help season that, help provide advisory roles and board memberships for women and increase the support for women entrepreneurs."

Support and opportunity did come about for women who were either members of the Seraph group in the years since then, or who were entrepreneurs seeking funding and expertise for their start-up ventures.

Seraph founders and current leadership still see a need for a women-only angel-investor group while others in the angel community aren’t so sure. But there seems to be general agreement that women represent a special brand of angel investor.

Preston says she "absolutely" thinks the need for a women’s group remains. And Machala agrees.

Preston, now based in San Francisco and the general partner of CalCEF Angel Fund, a first-of-its-kind angel fund for seed and start-up stage clean energy companies, says a study she worked on for the Kauffman Foundation "found women invest differently than men. And unfortunately, many feel a bit intimidated about asking questions in a room full of men."

Villette Nolon, who is current president and chair of the all-volunteer Seraph organization, that currently has 25 members, feels the need still exists because "the profile of women who invest as angels is still very different than the profile of men who invest."

Nolon, founder and CEO of the home-remodeling site HomeSavvi, feels that women "still aren’t in the places where deals are put together. There’s still an old boys club in deals and women who join formal groups thereby get access to those deals."

Nolon (on whose HomeSavvi advisory board I sit) says "angel investing is still a mystery to a lot of women. So a number of women are co-investing with their husbands."

In fact, couples investing may be the trend, as Liz Marchi, fund coordinator for the Frontier Angel Fund http://frontierangelfund.angelgroups.net/ in Whitefish, MT., and coordinator of the Montana Angel Network, suggests.

"We encourage couples to be involved together in the process and have found that creates a good culture of inquisitiveness," notes Marchi., though she touts the talent individual women bring to her group.

"Smart women are truly astounding thinkers in terms of relationships, markets and strategy," she says. "I can’t imagine our fund without women."

"I’m a graduate of a women’s college so focusing on women investors and entrepreneurs is in my DNA," Marchi adds. "I find women keenly interested in being angel investors."

"Couples," in fact, is one of the selling points for Zino Society, a for-profit angel organization created five years ago by Cathi Hatch, long active in the Seattle area’s philanthropic and non-profit communities. Hatch, who is also a Seraph member, has sought to create "camaraderie" for members with a mix of business, wine and investing.

Mary Holmes, Zino’s vice president for business development, says the organization’s goal of bringing entrepreneurs, investors and entrepreneurs together "in a relaxed and supportive environment" has spurred husband-wife membership participation in the 230-member organization, which includes 79 women.

M. Todd Dean, president of Keiretsu Forum Northwest, the other for-profit angel organization, estimates that about 20 percent of members in his four groups in Seattle, Bellevue, Portland and Boise are women.

"But the number of women is more like 35 percent when you include spouses, since we have a lot of husbands and wives in the group," Dean adds.

Among those who doesn’t think it matters whether the angel investor is male or female is Michael Elconin, a leader of the San Diego chapter of the Tech Coast Angels (TCA) group, the major angel organization in Southern California.

"We have relatively few women in TCA, maybe 5 percent of total membership," Elconin said. "Frankly I don’t see any difference between our women members and male members, either in term of participation with due diligence or investing."

Sherry Zins, a Keiretsu member who was business development vice president for the organization before joining the staff of Washington Technology Industry Association, says she dislikes women-only groups. "I prefer the mix because it’s more healthy.

Dan Rosen, who chairs Seattle’s Alliance of Angels (AoA), says the organization has "10 to 15 women among the 60-plus who regularly attend" luncheon meetings of the angel group that is Seattle’s oldest.

Rosen, who four years ago left the venture firm he had helped found in order to form Dan Rosen & Associates to focus on early-stage companies, says he doesn’t think gender is so much the issue as is the evolution of angel investing.

"It’s gone from part-time activity, where angel investing was a hobby, to professional angels, where investing is their day job," he says.

And given the positions now held by Preston at CelCEF, Marchi with the Montana angel groups, Hatch with her for-profit Zino venture and Machala, with her UW tech-transfer position, it’s clear that some of the "day job" roles have been assumed by those who learned the investor game as women angels.