15 November 2018

Professor Richard Harrison asks if women-only investment syndicates can bridge the gender gap.
Businesswomen in meeting

According to the British Business Bank, only 9% of business angels in the UK are women. In Europe the proportion is 11% and in the US it is 20%.

In our latest research project, Professor Colin Mason (University of Glasgow), Dr Tiago Bothelo (University of East Anglia) and I found there are significant structural issues that continue to inhibit women from entering the industry.

First, women are less likely than men to have held board-level positions and as a result lack professional experience raising investment.

They also appear to have a lower propensity for risk and a more conservative attitude to investment. Women investors make smaller and fewer investments, are less likely to back innovative ventures, and invest at the seed stage – the very early days of a venture.

There is a more fundamental structural problem holding women back. The angel investment market is dominated by investment syndicates and networks which are three times as likely to be run by men. In Europe one in three of these groups have no women members at all.

Those women who do join tend to share many of their characteristics and investment behaviours as their male counterparts. But they do not participate in angel groups as fully as men and don’t use the knowledge and opinion of other members as extensively.

Women angels are now most likely to join the growing number of women-only investment syndicates. The evidence suggests these offer better learning opportunities and a more supporting space to encourage investing. Investors in these groups make significantly more investments and are more open to the opinions of other members.

However these groups are not enough to improve gender balance. Nor do they fully realise the benefits of more diversity of experience and expertise to the industry.

We must also address mindsets which incline women to underestimate their capacity to make ‘risky’ investments, and the stereotypes that discourage them from joining groups mostly made up of men. Business angel networks have grown up out of boys clubs, tied to the needs, preferences and schedules of middle-aged men.

It’s time they moved away from their past to create different development and support opportunities for new and existing investors, regardless of their age or gender.

Richard Harrison

Professor Richard T Harrison is Chair in Entrepreneurship at University of Edinburgh Business School. An unabridged version of this post appeared on Real Business.