Women and Minorities’ Participation in Angel Investing

The Center for Venture Research at the University of New Hampshire conducts an annual survey of angel investors and entrepreneurial ventures that pursued angel investment, then publishes that information each year in a comprehensive report. The report began breaking out data for minorities and women in 2004. Below is the summary of the participation and access levels for minority entrepreneurs and angels and women entrepreneurs and angels during the period 2004-2010, taken from the Center for Venture Research’s annual reports.

In 2004, the first year that the study separated out women and minority entrepreneurs from the overall pool of angel investors and seekers of angel investment, women angel investors comprised 5% of the total number who invested that year. Women-owned businesses represented 4.7% of the total companies seeking angel funds. 12.5% of those women owned companies successfully obtained angel investment. That same year minority angels comprised 3.6% of the total number of angel investors while minority-owned businesses comprised 5.4% of those seeking angel investments. However, a massive 20% (1 in 5) of minority-owned ventures seeking angel investment garnered i! In other words, 1.1% of all the ventures seeking angel investment who obtained it were owned by minority entrepreneurs.

In 2005 the number of women angels actively investing increased to 8.7% of the total pool of active angel investors. Women-owned companies seeking investment also grew to represent 8.7% of the market. That year a whopping 33% of the women-owned ventures seeking angel investment received it!! Meanwhile, minority angels’ representation only grew incrementally to 3.7% of angel investors who invested.  However, 14.2% of firms seeking investment were minority-owned. Although only 7.6% of these received angel investments, a significant drop from 2004, minority entrepreneurs comprised 1.1% of all ventures seeking investment who obtained it. This number is approximately the same as the previous year.

In 2006 participation by women in the angel investment community continued to grow. Women angel investors grew by five percentage points to 13.8% of total active angel investors. Women-owned businesses also grew to 12.9% of companies seeking angel investment, although there was a drop to a more reasonable 21.5% of those women-owned ventures seeking investment who received it. Hence, the percentage of women entrepreneurs seeking investment who obtained it remained steady between 2005 and 2006 at 2.9% and 2.8%, respectively.

Minority participation in 2006 dropped off significantly. That drop continued into 2007 and 2008 when minority-owned companies pursuing angel investment were 3.7% of the total. In 2008 11.3% of minority entrepreneurs pursuing angel investment received it.  That same year women angels grew to a high of 16.5% of the total pool of active angel investors. This upward trend continued with women-owned firms comprising 15.7% of the total pursuing angel investment.

In 2009 the numbers for women angel investors dropped but the numbers for women entrepreneurs grew. Women owned ventures made up 21% of those pursuing angel capital in 2009 and in 2010. The percentage of those women owned businesses pursuing angel investment that received it grew from 9.4% in 2009 to 13% in 2010.

The participation rate of minority angels dropped in both years to a low of 2% in 2010. Minority-owned companies seeking angel investment made up 6% of the total. However all was not bad news. 19% of minority entrepreneurs seeking angel investment received it.

The Center for Venture Research recommends that, given the data, more minority-owned and women owned companies need to attract angel investor attention. In addition, both groups “need to increase their ‘investor readiness’ through education and networking”.