Women control 73% of household spending, according to a Joint Economic Committee report released in December by Representative Carolyn Maloney, a New York Democrat. Women's earnings will recover faster than men's as the economy rebounds, which means companies that market to females may perform well, said a Bank of America Corp. December research note to clients.
One of the major barriers for women CEOs of startups is a lack of access to the networks that lead to funding, said Amy Millman, cofounder and president of Washington-based Springboard Enterprises, which has helped 445 female-led companies connect with angel, venture and corporate investors to raise about $5.5 billion in equity financing over the last 11 years.
Finding Capital
"It's very difficult for any entrepreneur to get capital and it's even harder for women," said Stephanie Hanbury-Brown, 54, who worked at JPMorgan Chase & Co. for 15 years most recently as head of e-commerce before starting Golden Seeds in 2004. Serving on JPMorgan's diversity steering committee made Hanbury-Brown realize that the culture of large companies wasn't going to change and having more companies run by women is what would help lead to more gender equality in the workplace, she said.
Golden Seeds has about 180 active members who invest directly in startups that have at least one woman in a top executive-level position with equity in the company. Active members may also assist the startup company by mentoring the CEO or serving on the company's board. Since 2005, the group has invested more than $22 million in 36 different firms. There were also about 50 passive investors who put money in a fund created in 2008 that invested in 16 companies.
Second Fund Starting
A second fund is currently raising up to $25 million and is open to accredited investors through the end of the year. Investors must be accredited to participate in Golden Seeds, which means they must have a net worth of at least $1 million excluding primary residence or $200,000 in annual income. Members are required to invest at least $25,000 in one deal a year. Passive investors must put at least $250,000 in the fund and active investors must invest at least $100,000, Hanbury- Brown said.
The lack of well-known, successful women investors coupled with the fact that she had never been approached to be an angel investor helped prompt Peggy Wallace, 54, to join the group in 2005 after more than 20 years on Wall Street with jobs in structured finance at JPMorgan and Citigroup Inc.
"Where's the female Warren Buffett?" said Wallace, a managing director of Golden Seeds.
TV Appearance
Endline, whose candy company is based in New York, said her connections with Golden Seeds led her to a spot on television's HSN. Other companies pitching at yesterday's two-hour-long event, such as a website for custom-made home furnishings and a developer of medical retraction devices, are hoping they'll be able to tap those same connections.
"The top three things we look for are a great entrepreneur, a great entrepreneur and a great entrepreneur," said Hanbury-Brown. "We back the jockey over the horse, unlike some venture capitalists who are OK backing the idea or the technology."
Golden Seeds makes investments in multiple industries rather than just focusing on technology. About 30% has gone to startups in consumer goods, 30% to life sciences, 30% to technology and the remainder to media and hardware. The group has locations in New York, Boston, Philadelphia and San Francisco, unlike many angel groups, which tend to be more regionally focused.