How Women Can Become Investors in Venture Capital Funds

Are you interested in investing in the next big thing but don’t have the time or expertise to do it alone? Then becoming an angel investor in a venture capital fund may be an exciting option for you. As a limited partner, or LP, you can join forces with knowledgeable investors and fund managers to support promising companies and possibly earn high returns on your investment.

But before diving in headfirst, it’s essential to understand the ins and outs. Keep reading to learn more about becoming an angel investor as a limited partner.

Millions of People Qualify to Be Angel Investors — which means they are accredited. This translates to them having an income of over 200k a year or combined income with their spouse of over 300k, or assets over a million ( not including their home).

There are millions people in the United States who are financially qualified investors, but only a small fraction are actually investing. Learning how to invest and how to mitigate risks can make the world of investing more accessible to those who are not currently participating. When you become an angel investor in venture capital, you get the chance to help new businesses grow and see a return on your investment as well. It can take as little as 5–25k to start your investing journey.

Once you invest in a VC fund, you are considered an LP, or limited partner. The people who run the fund are known as GPs, or general partners. These funds invest in various stages of a business. Some funds invest in early-stage companies and help them grow, while others prefer to invest in companies at a later stage that may be more established.

Investing in a fund is generally less risky than investing in a single company. In a fund, you are pooling your money with others, and the experienced general partners research and vet the investments for you. Just like a mutual fund, this can help mitigate a portion of your risk. For example, the fund managers may invest the group fund in 20–40 companies, depending on the size of the fund. If just a handful of those companies succeed in a big way, you can make a significant profit. This is especially true if one of those companies becomes what the industry calls a unicorn — or a billion-dollar and above company.

Now, Women are Starting Their Own Venture Capital Funds

The good news is that more women than ever are starting their own venture capital firms in recent years. Now, more than ever, there is an increasing amount of interest in these types of firms. Currently, women receive only 2% of venture capital dollars, and this new interest can help move the needle and provide more equal funding for women.

There are other reasons why this is happening:

● There is a growing recognition that women-led businesses tend to outperform those led by men.

● There is a growing pool of talented female entrepreneurs seeking venture capital funding.

● There is an increasing amount of interest from major institutional investors in investing in women-led firms.

This is good news for both female entrepreneurs and the venture capital industry. As more women enter the field, they will bring new ideas and perspectives that will help drive innovation and growth within the industry. Additionally, their success will attract even more attention and investment from institutional investors, further solidifying the role of women in the venture capital industry.

Before Women Could Get Credit Cards Men Had VC Firms

Men’s involvement in venture capital firms grew in the early 1970’s, when women were unable to get their own credit card with out a man’s signature. At that time, the financial industry was male-dominated, and women were not considered viable investors. However, times have changed, and there are many successful female angel investors today.

If you’re considering becoming an angel investor, here are a few things you should know.

As an angel investor, you will invest in early-stage companies that are typically high-risk but have high potential rewards.

You must do your due diligence on each VC fund to ensure they fit your investment portfolio well.

One of the critical things to look for is a strong management team with a proven track record. The company should also have a transparent business model and realistic financial projections. Finally, it’s essential to understand the risks involved and only invest what you can afford to lose.

If done carefully, becoming an angel investor can be a great way to support innovative businesses and generate returns. If you’re considering joining these successful investors’ ranks, remember to do your homework and invest wisely in business or the fund that align with your values and vision.

The Woman Pioneer of Angel Investing: Meet Edith Dorsen

Before becoming a managing partner at Harvard Management Company, Edith Dorsen was an angel investor in several venture capital funds. Dorsen is different from your typical VC GP. She’s a woman, and she’s focused on investing in companies with women in leadership roles. She was among the first women to be called a “venture capitalist” when that term was coined in the 1970s. Dorsen began her career as a research assistant at Harvard Business School. She later worked as an investment banker at Goldman Sachs before earning her Harvard MBA. After graduation, Dorsen co-founded two businesses: an executive search firm and a venture capital fund. She also served on the board of directors for several public companies. In the early 2000s, Dorsen returned to Harvard to manage the university’s endowment. She helped grow the endowment from $18 billion to $36 billion during her tenure. She then launched the Women’s Venture Capital Fund in 2011, which was designed to invest in early-stage companies with high growth potential led by women entrepreneurs.

I sat down with Edith and Attorney Jennifer Post to talk about women in VC, and you can listen Here.

Keep the Conversation Going

As the founder of She Angel Investors, I gave a TEDx talk to discuss the importance of funding women. We need more female investors so that more women will receive funding. Women get 2% of VC funding but are over 50% of the population.

We can’t afford to leave 50% of the brain power on the sidelines. Their ideas, innovations, and cures will help save the planet.

Catherine Gray

Founder of She Angel Investors

Producer, Author, TedX Speaker, Investor

Host of Invest In Her Podcast

Learn more by visiting our website: www.SheAngelInvestors.com

And check out our upcoming movie: www.ShowHerTheMoneyMovie.com

Want more on investing? I interview GP’s, LP’s and founders on my Invest In Her podcast, available wherever you listen to content.