Golden Seeds is celebrating its 20th year of investing in promising women-led companies. Since its founding in 2004, Golden Seeds has become one of the largest angel networks in the country and is, by far, the largest that invests solely in women-led startups. To date, Golden Seeds has invested over $185 million in more than 250 companies that have gone on to raise well over $2 billion. Loretta McCarthy and Jo Ann Corkran, Co-CEOs and Managing Partners of Golden Seeds, share the Golden Seeds story and how that angel network has changed the face of venture investing.
Q: What is the origin story of Golden Seeds?
Golden Seeds was founded by a group of Wall Street women who recognized that women were staggeringly underrepresented in the vibrant world of early-stage investing.
In fact, at that time, women were starting over 25% of all companies in the US, but data from the University of New Hampshire reported that women-led companies were fewer than 3% of the approximately 48,000 companies in the country that received startup funding that year. And fewer than 5% of the 225,000 angel investors were women. A small group of Wall Street women recognized this gap and mobilized.
We started in a small way, spreading the word about our goals, urging women and men to join us as investors in this asset class, and welcoming women entrepreneurs to contact us. At the end of our first year, we had 12 members and had invested in two companies. Now, 20 years later, we have had over 1100 investors and have invested in more than 250 companies.
We were on a mission and were not easily deterred by the challenges or the skeptics. We knew that we had much to learn about early stage investing, so we started the Knowledge Institute, which offers training about angel investing in nine courses across a range of topics. And we also realized that in order to find the best women-led companies from throughout the US, we must expand beyond New York. Today, we have eight chapters (Arizona, Atlanta, Boston, Dallas, Houston, New Jersey, New York, and Silicon Valley) and members in 27 states. We have had the opportunity to closely collaborate with incubators, accelerators, universities, angel networks and venture capital firms from throughout the country.
Q: It is challenging to be successful as investors in early-stage companies. After all of these years, what are your biggest lessons learned about how to pick companies?
Yes, it is challenging, but we are continually learning.
- This is a team sport. We have learned that angel investing is a team sport. Being part of a network of investors allows you to tap into the diversity and breadth of expertise within the group, which we feel substantially elevates the quality of due diligence. A network's collaborative environment hopefully results in more informed decisions and better outcomes. Research has shown that investors who spend 40 hours or more on due diligence experienced a 7.1 multiple on the capital invested compared to a 1.1 multiple for investors who spend less than 20 hours on due diligence. We believe that extra effort is most likely to occur in a group.
- Diversification matters. Building a diversified portfolio of investments is important. In fact, we urge our investors to think from Day One about investing across a wide range of companies. It is impossible to know which companies will succeed, but it is well recognized that diversification generally boosts returns. Research says that approximately 90% of returns come from 10% of investments, arguing for investing in a variety of companies.
- Investing in people. It is always important to remember that we are investing in people – the people who had the idea and who will execute on their idea. There is no hard and fast way to assess the team you are investing in, but it is important to learn about their backgrounds, ask many questions about their business model and how they developed it, and determine if you believe they have the ability to attract great talent and build a great company. Ultimately, it is the quality of the team that is the key to success in building any business.
- Consider the exit. While you are considering the first investment, it is important to evaluate whether this company has the potential to produce a successful exit. Evaluate whether the market is large enough and whether that market is likely to embrace this innovation. It is also worthwhile to evaluate the exit results – such as acquisitions and/or IPOs – of other companies in the same or similar industries.
Q: What are the ways that angel investors support companies after the investment?
We have most certainly learned that the real work begins after the first investment – to help companies grow and succeed. There are many ways to be involved. We urge our members to offer their skills and contacts to our companies. Small gestures can make a big difference. Valuable introductions can be game changers.
Many of our members have served as board members and board advisors for our companies. These people are often invaluable in providing strategic guidance to companies, as well as accessing the larger Golden Seeds network in support of the companies.
Many companies come back to investors when they are ready to raise more capital. Although no one is obligated to make further investments in a company, we do urge our members to evaluate the progress and consider whether they continue to believe that the company has the potential they originally imagined – and to consider participating in follow-on funding rounds.
Angel investing is a long game. Exits can happen quickly, but it is likely that the best performing companies in an angel portfolio may take seven to ten years – or more – to reach a point where it has serious traction, many customers, reliable revenue streams and solid leadership. Those are the elements that may lead to an acquisition - or perhaps to an IPO in the public markets.
Q: What is your advice for people considering becoming angel investors?
Angel investing is endlessly stimulating and educational. It allows you to have a front row seat to emerging trends in many industries. Along the way, you are able to use your skills, networks, and capital on behalf of these early stage companies. Many of us find it thrilling to work with entrepreneurs who are pursuing their dreams and with fellow investors who are eager to participate.
Our best advice is to simply jump in and participate as much as you can. Most angel groups provide considerable support for new members. And there is training available through various organizations. As mentioned, Golden Seeds offers training through its Knowledge Institute, a nine-part curriculum. Also, the Angel Capital Association, the trade association for angel investors, offers a comprehensive training program.
Angel investors make their own decisions about what companies to invest in and at what level of commitment. It is a good idea to have your own view about how you will build your portfolio over time – and then to pursue that plan.
Q: What has been the most exhilarating part of the Golden Seeds story?
It has been endlessly gratifying to be on this journey. That has been propelled by two remarkable and irrefutable trends over these years.
- First, women are starting companies at rates that have never been seen before – and in every imaginable sector. Women have attained unprecedented levels of education, credentials, and experience. And it should not be surprising that they are emerging with business ideas that are promising and fundable. In fact, a recent study from the University of New Hampshire's Center for Venture Research concluded that over 100,000 women-owned business sought funding in 2023, a number that has been continually rising.
- Second, the pace at which women have become angel investors has also increased considerably. The same study concluded that women are now well over 40% of the 422,000 angel investors in the US. There, too, women have realized that they can use their skills, professional networks, and capital to fully participate in this work.
Golden Seeds is thrilled to have been a leader in this movement, and we look forward to the next 20 years!
Learn more about Golden Seeds here.
Jo Ann Corkran and Loretta McCarthy
Co-CEOs and Managing Partners of Golden Seeds