Gwen Edwards is a prolific angel investor and the Chair of the Angel Resource Institute, an organization that, in collaboration with Pitchbook, publishes the annual HALO Report™ on angel investments. Based on the results of the most recent report for 2021, Gwen shares some personal reflections on the state of investment in female founders.
Our 2021 Angel Resource Institute HALO Report™ captures trends we witnessed in 2021 and adds key historical perspective for the prior three years. We have been such optimists and energized by the growth in the ecosystem and by the continued professional development of the angel community at large. We have seen entrepreneurs rising with more geographic diversity and ethnic diversity than ever before and investors from many locations ready to fund. A key example is the significant rise of angel investing and entrepreneurship in the Southeast region over the past two years.
However, we are compelled to pause and take stock because of the disappointing data on the progress of women CEOs at the Seed and Series A stages. We see a backsliding from 2019 to present. The trend was so disturbing we went back into our 2019 and 2020 data to recalculate investment amounts and triple-check the data. The stark reality is that while women are securing an ever so slightly larger total dollar amount from a much larger amount of overall national investment, women CEOs’ percentage of the pie is steadily decreasing year over year from 2019 through 2021.
While we have only a subset of angel groups directly contributing their data to our study, the groups that have been steadfast in supporting our research have been Golden Seeds, Astia and others who care deeply about committing capital to women leaders. If anything, we worried that our aggregate data might be biased in favor of women CEOs.
We clearly have work to do in 2022 and beyond. We cannot go backwards. Women represent so much talent and promise for the future of this country, but they still need support, encouragement, and funding. Indeed, we have been a beacon to the world, with our gender diverse entrepreneurs building more strength and vibrancy in our economy and widely showcased by the U.S. Department of State to the rest of the globe.
While there is much good news and cause to celebrate with respect to ethnic diversity, geographic diversity, and growth in overall investments, we need to pause and reflect on the disturbing gender disparity data. Consider some of our key findings:
- Female CEOs are simply losing ground – both as a percentage of total invested dollars and percentage of transactions and in the rate of participation in those dollars and transactions. There is a disturbing decrease year over year for the past three years. And this is after an improvement in 2020 on a number of metrics.
- Ethnic CEOs overall are increasing their participation rate in and percentage of total dollars invested in the same three years. However, female ethnic CEOs’ percentage is decreasing both in terms of dollars and in participation rate.
- While in the aggregate gender presents a larger equity gap than ethnicity to overcome, there are also significant disparities between men and women in different ethnic groups. Both white women and minority women are losing shares of total dollars in comparison to their male counterparts.
After 20 years of dedicated focus on supporting and investing in women founders and CEOs, this data stopped me in my tracks. As an active, investing member of the angel community, I know how much both men and women care. I see the progress in sheer numbers of women becoming angels. The shape and face of our industry association, the Angel Capital Association, is also reflective of these shifts. Our call to action is clear. We simply have more good work to do.
Read the full report: HALO2021
Learn more about angel investing: Angel Resource Institute