ebanWhite Paper November 2010

WOMEN & EUROPEAN EARLY STAGE INVESTING

Strengthening Europeanentrepreneurship by enrolling more women in early stage investing

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Executive Summary

Businessangel investingisanessentialsourceoffundingandsupportforalargenumberofearlystageandstart-upbusi-nesses. Its importance has increased exponentially as theavailabilityofothertypesoffinancinghavedriedupduringthe

economicdownturnof2007-2010.Althoughitisestimatedthathalfoftheworld’swealthisinfemalehands,veryfewwomenareactiveinbusinessangelinvestment.AsurveyofEBANmembershasdeterminedthatfewerthan5%ofEuropeanbusi-nessangelnetworkmembersarewomen;withinEuropetherearesig-nificantdifferences,andcountriessuchasFranceandPolandreportthatalmostathirdofbusinessangelsarewomen.Theoverallfigureishoweverstaggeringlylow,particularlyincomparisontowomen’spar-ticipationinU.S.-basedangelnetworkswhere15%ofthemembersarewomen.AsEuropeanbusinessangelnetworkslooktoexpand,womenmakeanobviousdemographictarget.Increasingthescaleofbusinessangelactivityisessentialtoimprovingtheavailabilityoffinancetoinvestinearlystagebusinesseswhichhavesuchaprofoundimpactoneconomicgrowthandemploymentfigures.EBANseestheeffort tobringmorewomenangelstothemarketaspart of a broader effort to stimulate the business angelmarket anddiversify the private investor base so that it includes more women,moreethnicitiesandmoreagegroups.Developingmechanismstoin-creasethenumberofwomenbusinessangelsintheEUwouldachieveoverallobjectivestoincreasebusinessangelinvestmentgenerallyandimprovetheBANs’efficacythroughthetwininfluencesofdiversifiedintellectualcapitalandwiderbusinessnetworks.

ThisEBANWhitePaperisacalltoactionforallconcernedwithgrow-ingavibrantecosystemforentrepreneurship,especiallypolicymakers.Thispaperwillsuggestproactivemeasurestostimulatethenumbersofwomenparticipating in thebusinessangelmarket inorder to: in-creasethetotalnumberofbusinessangelinvestors;increasethedi-versity of skills and expertisewithin the business angel community;andtherebyincreasethesupplyoffinanceandassociatedsupportto

earlystagegrowthbusinesses thatareakeyplatformforeconomicgrowthandrecovery.

EBANbelievesthatwomenshouldcompriseamajorbusinessangelinvestor segment in Europe and that the EU should support initia-tives to increase thenumberofwomenbusinessangelswithagoalofachievingalevelof20%ofbusinessangel investorsinEuropeby2015.EBANbelieves that,once the targetof20% isachieved, therewillbeaself-sustainingcriticalmassofwomeninvestors,alevelthatwillremovetheneedforfurtherinterventiontoactivelystimulateandsupporttheparticipationofwomenasbusinessangels.

Toachievethisobjectiveitwillbeessentialto:

• Understandthebarriersfacedbywomeninbecomingbusi-ness angel investors. EBAN recommends an initial mappingexercisetoidentifycurrentbestpracticesforwomenbusinessangel investment within the EU context. The exercise shouldexamine the practices andoutputs achievedby existingBANsand compare those against the proportion of women in theirnetworks.ThesemetricswillhelpgaugetheefficacyofanynewprogramsandidentifyBANsthatneedadditionalsupporttobuildtheirfemalemembership• ImplementaprogramofbestpracticescombinedwithincentivestotheBANsandpublicauthoritiesforcultivatingwomenangels.

EBANrecommendsthatactionbeundertakenatthreelevels:EUlevel;network; and individual. Our recommendations are based on activi-tiesaimedatincreasingtheawarenessofpotentialwomeninvestors,changing theoperationsofbusinessangelnetworks,anddevelopingpublicly-fundedfinancialinstrumentstostimulateactiveparticipationofwomeninthismarket.Namely:

1. Research the impactof currentwomenmemberson theirbusinessangelnetworksanddevelopbestpracticestoexpandtheirmembershipandfinancialparticipation.2. Execute an EU-wide awareness-raising campaign, deliv-eredwith thesupportof localBANsand/orotherappropriateorganizations.3. Deliveratailoredinvestor-readinessprogrammeforwomeninvestorsacrosstheEU,withappropriatelocalpartners.4. Ensure that professional standards and codes of conductdevelopedatEuropeanlevelbyEBANandatnationallevelen-couragediversityandparticipationofwomenintheearlystageinvestmentmarket.5. Support thecreationofanEU-wide,umbrellaorganizationforthefemaleinvestorcommunity.6. Explore the deployment of new financial strategies (suchas co-investment funds) to stimulate women business angelinvestment.

1US: Women comprise 46.3% of US top wealth holders (source: Genspring report, Women & Wealth); more than half of the investment assets in the US are controlled by women and 48% of the country’s mil-lionaires are women (source: Oppenheimerʼs 2006 study, Women and Investing); and women are projected to acquire over 85% of the $12 trillion growth of US private wealth between 1995 and 2010 (source: Marti Barletta of TrendSight Group). UK: Women currently hold 48% of Britain’s personal wealth and this proportion will grow to 60% by 2025 (source: Centre for Economic and Business Research).

“Diversity - different perspectives - is a

key driver of innovation and enriches all ecosys-tems. When an ecosys-tem is open to gender diversity, it is often open to other forms of diver-sity: ethnic, age, type and sector of investee compa-nies. As early stage - equi-ty - investing is becoming

an asset class, it is ever more important that all parts of its ecosystem attract, encourage and leverage diversity. Thanks to many con-tributors, EBAN has captured in this White Paper, the current situation, why it will ben-efit all to have more gender diversity, as well as proposals for all stakeholders on initiatives we can undertake to reach a minimum goal of 20% women investors - a level at which they no longer are a small minority.”

Brigitte Baumann. President of EBAN.

EXECUTIVESUMMARY

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1. BackgroundEBAN estimates that across Europe there are 75,000 active busi-nessangelsorganizedin391businessangelnetworksin32countries,nearlyallcountriesthataremembersoftheEuropeanUnion.Thesenetworksaremakinginvestmentsinunquotedcompaniesanddedicat-ingtheirtimeandnetworktosupportearlystageentrepreneurs.Thegrowthofthebusinessangelmarkethasbeenspectacular inrecentyears, spurred by the internet bubble and the recent financial crisiswhichhavepushedVCsoutofearlystageventurecapital.Despitethisgrowth,however,theEuropeanmarketisonlyonequarterofthesizeof theUSmarket,and theproportionof femalebusinessangelshasremained stable at around5%; in theUS, the proportion ofwomenbusinessangelshasgrowninrecentyearsto15%.

Womenare seriouslyunderrepresented in this businessangel assetclass in Europe, particularly when one considers other aspects ofwomen’sparticipationinthebusinessandleadershipecosystem:

• Womencompriseupto40%ofentrepreneurs• Womencomprise,onaverage, 11.5%ofBoards inEurope,withsignificantlyhigherproportionsevidentinSweden,FinlandandNorway• Womencontrolaround50%oftheworld’swealth.

AnEBANsurveyofmemberbusinessangelnetworks(BANs)showsthefollowingstatisticsfor2009:

Women as a proportion of total BAN membership 4.86%

Women as a proportion of new BAN members 6.86%

Proportion of BANs that report NO women members 28.76%

Proportion of BANs that report that fewer than 10% of members are women (including those with no women members)

80%

Proportion of BANs that report that over 10% of members are women 20%

Thefact that theproportionofnewBANmemberswhoarewomenis, at 6.86%, 2% higher than the overall proportion of women BANmembers,suggeststhattheproportionofwomenisgraduallyincreas-ing.However,at thisrateof increase, itwill takeavery long timetoachieveacriticalmassandself-sustainingmassof20%womenBANmembers.

2 Women-owned firms account for 40% of all privately held US firms (source: Centre for Women’s Business Research 2008–9). In the UK, women-owned businesses comprise approximately 16% of the business stock and women com-prise approximately 27% of the self-employed population (source: Prowess, ref. Women’s Business Ownership, Professor Sara Carter, 2006).3 Source: Catalyst 20104 US: Women comprise 46.3% of US top wealth holders (source: Genspring re-port, Women & Wealth); more than half of the investment assets in the US are controlled by women and 48% of the country’s millionaires are women (source: Oppenheimerʼs 2006 study, Women and Investing); and women are projected to acquire over 85% of the $12 trillion growth of US private wealth between 1995 and 2010 (source: Marti Barletta of TrendSight Group). UK: Women currently hold 48% of Britain’s personal wealth and this proportion will grow to 60% by 2025 (source: Centre for Economic and Business Research).

ThisEBANWhitePaperconsidersthepotentialcausesoftheunder-representationofwomenasbusinessangelsandexamineswhatcanbedonetoensurethatwomencananddobecomeamajorinvestorsegment,bothhelpingtofundmoredealsandalsoincreasingdiversitywithinthebusinessangelcommunity.Thisdocumenthasbeendevel-opedtocoincidewiththeSwedishPresidencyoftheEU,whichhadastrongfocusonwomenentrepreneurship. Ithasbuiltonthediscus-sionsofthe“BreakfastforWomeninvestors”,organisedbyEBANintheframeworkofits8thAnnualWinterUniversity,heldinNovember2009

inStockholmandhostedbytheSwedishVentureCapitalAssociationundertheauspicesoftheSwedishPresidencyoftheEU.

2. The expected impact of more women angels

If 20% of angel investors were women, how would the sector benefit?

There are three levels atwhich a growth in the number ofwomenbusinessangelswouldhaveasignificantimpact:

-------------------------------------------------------------------AT THE SECTOR LEVEL –

A STRONGER EARLY STAGE INVESTMENT ASSET CLASS-------------------------------------------------------------------

• Increased investment and deals being funded–Increasingthenumberofwomeninvestorswouldincreasethetotalnumberofactivebusinessangelinvestorsandleadtoageneralincreaseinthenumberofdealsbeingfundedandenabledtoreachtheirgrowthpotential.• Investment diversity–Europeanbusinessangelinvestmenttodatehashada strong focuson thehigh technology sectordespitetheexistenceofearlystagebusinesseswithsignificantgrowthpotentialinotherindustryandmarketsectors.Thepre-ponderanceof technologydealsmayoriginatewith the typicalprofileandinterestofthecurrentbusinessangelinvestorbase.Adiversified investorbasewillattractawiderarrayofunder-representedbusinesspropositionssuchasservices,consumergoodsandsocialandsustainableentrepreneurship.Therefore,anincreaseinthenumberofwomenbusinessangelswilllikelyincreasedealflowanddealdiversityinbusinessangelfinance.

“Involving women as investment part-

ners has improved the early-stage ecosystem for everyone concerned. Golden Seeds has been a leader in improving the quality of due diligence performed on early stage investments, and many groups have adopted our model for its breadth,

detail, efficiency and quality. With research showing that companies thrive better under angel investment than other forms, Golden Seeds has provided outstanding mentoring, strategy and marketing advice. Having at-tended several EBAN events, I am confident that engaging more women in business angel investing will add a great deal of energy to Europe’s entrepreneurial ecosystem.”

Jennifer NaylorManaging Director, Golden Seeds

1.BACKGROUND/2.THEEXPECTEDIMPACTOFMOREWOMENANGELS

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and gaining an insight into the requirements of investors, andhow to access finance,may encourage suchwomennot onlytobecomeentrepreneursthemselvesbutalsotoseekexternalfinancetodeliverfasterandgreatergrowthintheirownbusi-nesses.Bringingmorewomen into theearly-stageecosystemasinvestorshasthepotentialtostrengthentheirparticipationatalllevelsofbusiness.• Enhanced skills –Women’scareerpathsareoftenrelativelynarrow,becoming,forexample,sectorormarketspecialists.Byparticipatinginbusinessangelnetworksinvolvingco-investment,andworkingasagroupwithdifferentbusinessangelinvestorsandinarangeofearlystagebusinesses,womenwouldacquirebroadercompetencesthattheycanthenuseintheircurrentorfuturecareerroles.Intheraceforintellectualcapitalthatbusi-nessmustrun,bettereducatingandtrainingwomenforleader-shiprolesmakesanenormouscontributiontocapitalistsociety.• Better management of transition years – Many wom-en make a number of transitions within their careers, poten-tially involving career breaks or changes of career direction.Participation as a business angel would offer women an op-portunity tostayclosely involved in thebusinessworldduringsuch transition periods and to keep thei skills and experienceuptodateandmarketable,bystayingabreastofmarkettrends,whetheritbeintermsofsectors,companyvaluations,exitstrat-egies,etc.Thismaymakeiteasierforsuchwomentochangecareerdirectionorre-entertheformaljobmarketplaceatacomparableleveltothatatwhichtheyleftit.• Networking – Women, by being part of a BAN, will havetheopportunitytonetworkwitharangeofsuccessfulbusiness-menandwomenfrommanysectorsandbackgrounds.Suchanetworkofcontactscanbeanimportanttoolinmanagingtran-sitions,suchaschangesincareerdirectionand/orre-enteringtheworkforce.

5 Merrill Lynch Investment Managers (MLIM) Research, 2005

• Diversified expertise for funded businesses–Businessangels often providemore than justmoney to the businessesthat they invest in: theybringexpertise,experienceandanet-work of contacts to support their investment. Non-financialsupporttostart-upshasproventobeasimportant,ifnotmoreimportant, than financial support at the early stages of com-panydevelopment for developing partnerships, client lists andcriticalbusinessstrategy.Intoday’smarketplace,womenmakea largepercentageofhouseholdpurchasingdecisions,so thatincreasingthenumberofwomenangelinvestorsmeansaddingmission-criticalexpertiseformarketing,messagingandproductdevelopmentaswellascapitalandmentoring.

-------------------------------------------------------------------AT THE LEVEL OF THE BUSINESS ANGEL NETWORK

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Establishedbusinessangelnetworkswillbenefitinanumberofwaysfromefforts to stimulate and increase thenumberof activewomenbusinessangelinvestors,providingastrongincentivefortheirsupportofinitiativestoproactivelyrecruitwomeninvestors.

• New deal flow–BANshavemultiplesourcesofdealflow,includingtheprivateandprofessionalnetworksofexistingmem-bers.Newwomenmembers,bybringingdifferentpersonalandprofessionalnetworks,willbringnewanddiversedealflowtothenetwork.Itisworthnotingthatfive-yearoldwomen’sBANGolden Seeds now has the largest deal pipeline of any otherBANintheUnitedStates,andthatitspipelinecoversmorethan14sectors.• New members – Encouraging women to join establishedbusinessangelnetworkswould increasethe levelofmember-shipoftheBANingeneral.Thelargerthenumberofactivein-vestorsinthenetwork,thegreaterthenumberofdealsthatcanbe fundedand thegreater theopportunity forsyndicationbe-tweeninvestorstodeliveralargerfundingpackagetoagrowthbusiness.• Risk mitigation for better returns–AdiversifiedinvestorbasewithinaBANwouldbettermitigatetheriskofearlystageinvesting through the broader intellectual capital it represents.Women approach due diligence very differently, tending to bemorethoroughinduediligence,toaskmorequestionsandpushon real numbers rather than expected ones.Research showsthatwomenare“lesslikelytoholdalosinginvestmenttoolong,towaittoolongtosellawinninginvestment,tobuyahotinvest-mentwithoutdoinganyresearchortoallocatetoomuchoftheirmoney toone investment” . It isexpected thatby introducingmorerigorousevaluationandmorediversebusinessskillstotheduediligenceprocess,abetter return from investmentsmadethroughtheBANsasawholewillensueovertime.

-------------------------------------------------------------------AT THE INDIVIDUAL LEVEL

FOR WOMEN ANGEL INVESTORS -------------------------------------------------------------------

Becomingabusinessangel investorwouldbringarangeofpotentialbenefitstotheindividualwomen.

• Financial Returns–Businessangelinvestment,asaclasswithinabalancedinvestmentportfolio,offersanopportunitytoinvestorsforwealthcreationasitoffersthepotentialforastrongfinancialreturnoninvestment.• Increased entrepreneurial spirit and skills –Angelinves-tors are often past entrepreneurs themselves, many of themserial entrepreneurs. Active angel investors may thus also beestablishingnewbusinesseswhilstalsobeingactiveangels. Ithasbeenshownthatwomenwhostartupabusinessoftendonot look for equity finance, but rather seek to achieve slower,moreorganicandlower-riskgrowth.Becomingabusinessangel

“Although much progress has been

made in attracting women to early-stage investing and to entre-preneurship over the last decade, it is important not to get complacent by assuming that the growth will continue especially given the ongo-ing uncertainty in global

economies. With its extensive relationships in several countries, and its exposure to a variety of network structures and diverse economic incentives, EBAN is well-positioned to take a leading role in encouraging women throughout Europe to participate in this as-set class, and well-positioned to assess which policies and practices are most effective at achieving the goal.”

Wendee Wolfson Kanarek. Principal at Wealthbridge Partners, Co-founder of WomenAngels.net,

Member of Active Angel Investors, and Co-founder of Women’s Growth Capital Fund, a venture capital fund focused exclusively on women entrepreneurs.

2.THEEXPECTEDIMPACTOFMOREWOMENANGELS

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angelinvestmenttofundtheirbusinessventuresandsotheydonothavethesamelevelofawarenessoftheassetclassastheirmalecounterparts.• Withsofewwomenbusinessangelinvestorscurrentlywithinexistingnetworks,thereisnoestablishedcohortofwomenbusi-nessangelswhodiscusstheirangel investmentactivitywithintheir wider social and professional networks and hence raiseawarenessoftheassetclassanditsopportunitiesinthewiderenvironment.• BecausetheprofileofmostBANmembersismale,servicesdeliveredbymostBANs,and thewaysuchservicesaremar-keted,addressthispredominantlymaleaudience.Similarly,mostBANmanagersarealsomaleand likelyhavenot identifiedtheneedtoincreasetheparticipationofwomenasbusinessangels,or,iftheyhave,maynothaveaccesstotheappropriatenetworkstoachievethis.Withover28%ofBANssurveyedbyEBANhav-ingnowomenmembersin2009,itisaconfidentwomanwhoispreparedtojoinanall-malenetworkasanoviceinvestor.• Inthepast,womenhavebeenlesslikelythanmentovalueorbelongtonetworks(professional,alumni,private,etc.).Assuch,theyarelesslikelytobenetworkedtoothermaleorfemalein-vestors.Thisisgraduallychanging,andwehaveseenworldwidetheemergenceofmanywomenentrepreneurassociationsthataresuccessfullyaddressingthespecificneedsandapproachesof women entrepreneurs and encouraging women to becomeentrepreneurs.Women-focusedbusinessangelnetworkswouldbeavehicleforintroducingmorewomentoangelinvesting.

-------------------------------------------------------------------CURRENT MARKET OFFERINGS

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The currentmarket structure and support serviceshave evolved tomeet the needs of their traditional audience: predominantly middle-agedmenwithanentrepreneurialorinvestmentbackground.

Thus,existingBANsdonottypicallymeettheneedsofpotentialwomenbusinessangelinvestorsinarangeofways,summarisedinthetablebelow:

1. Deal flow –ExistingBANs tend toselectbusinesspropo-sitions tomeet the preferences of their existing investor baseand thus tend to focus on high-tech, clean-tech or med-techpropositions.2. Meetings – the schedules for BAN investor meetings andduediligencesessionsaredesignedtosuittheschedulesoftheircurrentaudienceand,assuch,maynotbesuited towomen’s

3. The reality: why are there so few women angel investors today?TherearethreegenerallyacceptedreasonsforthedearthofwomenangelinvestorsinEurope:attitudesandmindsets;lackofawarenessofbusinessangelinvestmentasanassetclass;andthecurrentmarketoffering,whichhasevolvedtomeettheneedsofitstraditionalinves-tors,typicallymiddle-agedsemi-retiredmen.

-------------------------------------------------------------------ATTITUDES AND MINDSETS

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• Women tend to underestimate their financial capacity for‘risky’ investmentsaswellas theirstrengthsasrisk-astute in-vestors.Educationshouldcovertherisksandrewardsofbusi-nessangelinvestmentasanassetclassandhowitfitsintotheiroverallwealthmanagementstrategytodeliverabalancedport-folioapproach.• Angelinvestinghasitsowncalculuswhichisnotwellunder-stoodoutsidethesmallgroupofBANs.Womenperceivethatalargecapitaloutlayisrequired.Educatingwomenaboutthescaleofinvestmentrequiredandtheopportunitiesforsyndication,aswell as providing a supportive environment for co-investmentandsyndication,mayencouragegreaterparticipation.• Women’smyriaddutiesinthefamilyandcommunityimpacttheirschedulesdifferentlythanthoseofmensothattheirmech-anismsforwealthmanagementmayrelyonprofessionaladvi-sorsand/orinvestmentfundstosavetimeandenergy.Businessangel investment isproactiveandrequiresatimecommitmenttoreviewandassesstheavailableinvestmentopportunities,aswellastodeliverfurtheraddedvaluepost-investmentthroughongoinginvolvementwiththeinvesteebusiness,whichmaydis-couragewomen frombecoming involved.Thecreationof col-laborativenetworkstosharethedemandsofduediligenceandfollow-onreportingcanprovideanavenueforwomen’sgreaterparticipation.• TypicalbusinessangelinvestorsinEuropecurrentlyarere-tiredmaleentrepreneurswhoareover55.Womenwhohaveadifferentbackgroundmay thereforebelieve that, because theydonothave thesameskillsas theexistingcohortofbusinessangelinvestors,theydonothavetherightorappropriateskillstoaddvaluetoaninvestorgrouporanentrepreneur.Theymaybelievethattheirtrackrecordorexperiencewouldnotbesuf-ficientlyvaluable.Inreality,theadditionofnewanddifferentskillstotheinvestorbasewillincreasediversityandmayimproveper-formance.Educationtoaddressthisissuewillencouragemorewomentoparticipate.

-------------------------------------------------------------------LACK OF AWARENESS

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• Theevolutionofbusinessangelinvestmentasalargelymaleactivityhastendedtohidebusinessangelinvestmentasanassetclassfromwomen.Manybusinessangelsareformerentrepre-neursandhaveraisedequityfinancefortheirbusinessventuresbeforesellingandusingthereturnstomakeangelinvestmentsinotherbusinesses.Becausefemaleentrepreneursarelesslikelythanmaleentrepreneurstoseekexternalfinancefortheirven-tures,fewerwomenentrepreneursarelikelytoaccessbusiness

“It is vitally important, during these chal-

lenging economic times, that we mobilize the skills and capabilities of women in early stage in-vesting. Start-up compa-nies will be the engines of the recovery and future economic growth across Europe and experienced business women could re-

ally add significant value to these companies as investors, with their unique knowledge, insights and experience.”

Rosemary Forsyth Founder & General Partner, Forsyth Group

3.THEREALITY;WHYARETHERESOFEWWOMENANGELINVESTORSTODAY?

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male-dominatedBANs/seedfunds.Researchkeyinputandout-putstatisticsforthedifferentnetworks,suchas:typicaldealsize,sector etc.; BAN service provision, e.g. meeting time, trainingprovided, syndication support etc.; and returnson investment.Analysisofdatatoidentifyanycorrelationbetweenthevariablesidentifiedand theproportionofwomen investors. Lookat exitdataandratesofreturnbasedonthesectorofinvestment(hightechvs. low tech/services).Use thisanalysis to furthershapepolicyrecommendationsandtoevidencethecaseforinterven-tiontostimulatewomenbusinessangelinvestment.2. Build awareness: develop and implement co-ordinatedawarenesscampaignstopromoterolemodelsandtrainingforwomenangel investorsat theEuropean levelwiththesupportofnationalfederationsofnetworks,supportedbyPRactivitiesinmainstreammediatopromotesuccessstoriesandbroadentheaudiencethatismadeawareofthecampaign.3. Training through Investor Readiness Programmes:whilstthe technical content of such investor readiness programmeswouldbegeneric,thesewouldberunforwomenonly,inalo-cationandatatimethatreflectswomen’spreferencesandde-livered in a sharing and collaborative manner, harnessing theenthusiasm of existing women investors as ambassadors androle models. Furthermore, the content would be broader andaddressspecificissuesandbarriersforwomenbusinessangels,suchas: theplaceofbusinessangel investment inabalancedinvestmentportfolio;scaleofinvestmentrequired–howtostartsmallandbuildaportfolio;skillsandtimecommitmentsrequired;managingriskandensuringsecurity.Suchprogrammescouldextend to financing delivery of investment support for novicewomeninvestors,suchas:syndicationsupport,structuredas-sistance to complete due diligence and agree terms, standarddocumentationetc.

4. Creation of a Europe-wide female investor-run commu-nitywhichcouldleadtoaEurope-widewomenbusinessangelnetworkandencouragetheestablishmentofmultiplelocalangelnetworksandseedfundsendorsingdiversity.Thiscouldeventu-allyleadtothecreationofaEuropeanfundwithastrongfocusonwomeninvestors.Thefirststeptosuchaprocesswouldbethe proposedmappingprocess. This initiative, inwhichEBANcould play a key role, should collaborate with and mirror theEuropeanNetworkofWomenAmbassadorsrecentlysetupbytheEuropeanCommission.

timepreferences.Similarly,thereisastrongfocusonface-to-facemeetingsandeventsthatmaynotmeetwomen’sschedulingorsocialpreferences.3. Learning development and investment scale–Menandwomeninvestdifferentlyandapproachtheprocessdifferently.4. Support–mentypicallyliketodoittheirownway.Women,bycontrast,tendtowanttodoit ‘therightway’.Thus,womenprefer to understand best practice and to have some formofstructuredsupportastheylearn.

Summary of the differences between current market offers and identified needs

Current BAN Offer Typical Potential Wo-men BA requirement

Deal flow • Technology focus • Broad, mixed tech and services• Mix of ‘do good’ and ‘do well’• Interest in suppor-ting women entrepre-neurs• Interest in proposi-tions that appeal to a female audience

Learning and development

• Learning by doing • Training and then doing

Support • Loose syndication • Structured syn-dication and group investing at least to build their portfolio

Investment Scale • Several BANs require a minimum investment per inves-tor/deal• Expectation that an active investor would invest €50 to €100k per annum

• Start with lower entry tickets, €10 to €20k, progressively increasing as they build experience

Meetings • Breakfast & evening • Lunch time & virtual, evenings virtually

6 See existing research in the US about this topic: www.kauffman.org/experience-networks-encouragement-support-keys-for-high-growth-women-entrepreneurs.aspx

4. Recommendations: what can be done to change the situation?To achieve the stated objective, of women becoming a key investorsegmentandcomprising20%ofearlystagebusinessangelinvestorswithinEuropeby2015,willrequireproactiveinterventiononthepartofBANsandpublicauthorities toencouragegreaterparticipationbywomenasbusinessangelinvestors.EBAN therefore recommends that the following activities should beundertakentodeliverthisobjective:

1. Research:Undertakeathoroughmappingexerciseofexist-ingEuropeanbusinessangelnetworkstoidentify:women-onlyBANsandearlystagefunds;BANs/seedfundswithahighcom-mitmenttogenderdiversityandthataretrulymixed;andnormal

“Business angels are the lifeblood of ear-

ly stage businesses, in-vesting billions of euros across Europe in grow-ing young companies. In the current economic en-vironment, it is essential that we encourage more angels to join the mar-ket – in particular female investors who so far have

shied away from this opportunity. Women now have the wealth to invest – but more im-portantly, they have great skills to bring to angel investing. They are good communica-tors, who work collaboratively and listen. All of these attributes are greatly needed by to-day’s businesses.”

Sally GoodsellCEO, Finance South East

4.RECOMMENDATIONS

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UK• BBAAAwarenessCampaignforwomeninvestors• FinanceSouthEast

*FundingEnterprisingWomen(FEW!)2006–2009(UKandEuropeanprogramme)*WomenInvestinginWomen (WIW)2007–2009(UKonly)

• YTKO*“Going4Growth”Programme*InvestmentReadinessProgrammeforWomen

• Addidi

ITALY• IntesaSanPaolo:

*CornerRosa

USA• Severalwomen-onlynetworks includingWomenAngels.NetorGoldenSeeds

OTHER:• Astia

Relevant Articles:

• Women business angels – essential players on the financial markets,Swedishagencyforeconomicandregionalgrowth,2009• The Anatomy of an Entrepreneur: Family Background and Motivation, Vivek Wadhwa, Raj Aggarwal, Krisztina “Z” Holly,AlexSalkever,KauffmanFoundation,2009• Women and angel investing: An Untapped Pool of Equity for Entrepreneurs,KauffmanFoundation,2006• Report on Women and Entrepreneurship,Babson,2007• 3rd European PWN Board Women Monitor 2008,EuropeanProfessionalWomen’sNetwork,2008• Balancing Work and Family: Four Women Executives Speak,May24,2000inKnowledge@Wharton• The Economic Impact of Women-Owned Businesses In the United States,CenterforWomen’sBusinessResearch,2009• Reducing administrative burden: promoting women’s entre-preneurship, ecodesign for a sustainable future, key enabling technologies,DGEnterprise&Industry,December2009

Acknowledgments: EBAN would like to warmly thank the following individu-als for their contribution to this White Paper: Brigitte Baumann, Sally Goodsell, Sharon Vosmek, Rosemary Forsyth, Wendee Wolfson Kanarek, Jennifer Naylor, and the EBAN Team Claire Munck and Erica Norchi.

5. Encourage established BANs to increase diversitythrough the promotion of professional standards at EuropeanandnationallevelsbyinclusionofadiversitycommitmentwithincodesofconductforBANsandbyencouraginggreaterdiversityinBANmanagementstructures.6. Stimulate the development and testing of new financial instruments to support women business angel investment and business propositions that would appeal to women in-vestors.Thiscouldinvolve,forexample:apubliclyfundedco-investmentfundtomatchwomenbusinessangelinvestmentatEuropean,nationalorregionallevel;aco-financedfundencour-aging female investors to invest passively, initially through thefundlinkedtoaneducationandawarenessprogramme,tolaterencourage direct investment; the development of mezzaninedebtinstrumentstomatchbusinessangelinvestment,deliveringleveragesothatsteadygrowthpropositionswoulddeliveranac-ceptablerisk/returnprofile;thedevelopmentofdebtinstrumentstoaddress thegrowthambitionsofsocialenterprises thatde-liverloanmanagementandaviableexitmechanismformatchingbusinessangelfunding.

ConclusionsEBANbelieves that it is possible to achieve theobjectiveofwomenbecomingakeyinvestorsegmentandcomprising20%ofearlystagebusiness angel investors by 2015. However, to do this will requireproactiveinterventiononthepartofBANsandpublicauthorities.

ItwillrequiremorethanjusttaskingexistingBANstorecruitwomenmembers,ascurrentnetworksdonotsufficientlyaddresswomenin-vestorrequirements.Itwillrequireamixtureofinterventions,including:

• Supporting women investor communities across Europe,whichcouldleadtowomen-onlynetworks;• Adjustment to themodusoperandiof existingnetworks tocreatefullymixednetworks;• Encouragement forexistingwomenbusinessangels toactas ambassadors and become proactive role models for newwomeninvestors;• Investorreadinesstrainingtargetingwomen’sneeds;• Deliveryofstructuredsupport fornovicewomenbusinessangelsontheirinitialdeal(s);and• Thecreationofincentivesforwomentoinvest,suchaspub-licly funded co-investment vehicles and other innovative newfinancialinstruments.

AkeyinitialstepwouldbethemappingexercisetoidentifyBANsthathaveactivewomeninvestorsandanalysisofhowtheirpracticesandoutputsdifferfromother,moreconventional,BANsinordertoidentifycurrentbestpracticeasastartingpoint.

-------------------------------------------------------------------EXAMPLES OF CURRENT INITIATIVES TO ENCOURAGE

THE PARTICIPATION OF WOMEN IN THE ANGEL MARKET-------------------------------------------------------------------

SWEDEN• NetworkofwomeninvestorsinGoteborg• Fundbywomenforwomen,Theia

FRANCE• FemmesBusinessAngelsinParis• FédérationPionnières

“I am convinced that no matter if one has

diversity on a board level in a large quoted compa-ny or a diversified invest-ment decision around an angel investment, the best decision will be taken when there is a mixture between women and men taking the deci-sion. This will without

any doubt increase return on investment in the long term.”

Dušan Stojanovicfounder of the early stage fund True Global Ventures

www.trueglobalventures.com specialized within ICT in Sweden, France, Germany, US and China with unfortunately no female associates (yet)

CONCLUSIONS

EBAN is the European Trade Association for business angels,

seed funds and early stage market players.

Our mission is to support the growth and professionalisation

of the early stage investing sector, from a 3 billion¤ to a 10 billion¤ asset class,

up from 1 billion¤ 5 years ago.

The full and updated list of EBAN members can be found at

www.eban.org/membership/directory

EBAN SecretariatRue Vautier 541050 Brussels

T: +32 2 626 20 62F: +32 2 626 20 69

info@eban.org

www.eban.org