Women 'angels' changing Michigan's investment culture
When Natalia Oberti Noguera launched a network of women entrepreneurs seven years ago in New York City, she came to realize that not only was it hard to get funding, but it was rare for her to find someone who looked like her and had a similar background among investors.
"Marie Wilson from the White House Project had a great quote. She said, 'You can't be what you can't see,' " said Oberti Noguera.
As a woman, a Latina and a member of the LGBT community, she didn't see herself in the existing landscape of angel investors across the country. So she decided to change the status quo.
Oberti Noguera started the Pipeline Fellowship, an investing boot camp for women, to increase diversity in the U.S. angel investing community and create capital for women social entrepreneurs. Since her first class in April 2011, the program has trained 80 women in 10 U.S. cities and made more than $400,000 in investments in new companies.
Sometimes referred to as "sharks," angel investors use their own money to back companies and startups, often providing additional help through mentoring and networking in exchange for a stake in the company. The public's awareness of the process has grown thanks to the popular ABC television show "Shark Tank." The show features two woman sharks — inventor and entrepreneur Lori Greiner and businesswoman and investor Barbara Corcoran.
Now, the Pipeline Fellowship is coming to Detroit, where Oberti Noguera hopes to tap into an environment ripe for entrepreneurship, with a low cost of entry and room to stake a claim. But, she says, this doesn't necessarily mean funding opportunities are keeping up with the rate of development, particularly for women-run businesses.
"There's really this push for the startup ecosystem and revitalization," she said. "Often I see a lot of incubators that launch but I don't see much change on the funding side of things."
According to the Center for Venture Research at the University of New Hampshire, over the last decade, women have increased from 5 percent of all angel investors in 2004 to 19.4 percent in 2013. At the same time, women-led businesses pitching for angel investments has increased from 4.7 percent to 23 percent.
Overall, however, the number of women-led businesses receiving funds remains a small percentage of those who pitched ideas. In 2013, just 19 percent of women-led companies seeking angel investors received funding.
The center's director, Jeffrey Sohl, said when there is one or two women at an investing firm, they are less likely to speak up and are often viewed as a novelty.
"But once more women are involved, they tend to make more of the bigger deals and that stereotype is diffused."
'The dolphin tank'
The all-women investor team at the Belle Michigan Fund prefers another term to "sharks."
"Instead of the shark tank, we call ourselves the dolphin tank," said co-founder Carolyn Cassin. "We're kinder, gentler, smarter and more beautiful."
In all seriousness, the work Cassin and her co-founders are doing has been key to diversifying the field of investors. In turn, that has created more opportunity for women-led businesses seeking funding in Michigan. Her group of investors believes in a more gentle approach where, even if they don't plan on investing, they will still offer guidance and feedback to help a person improve their product and pitch.
"It's all additive. It just gathers momentum," she said. "We're building an ecosystem for women entrepreneurs to thrive."
When the Belle Michigan Fund first formed in 2012, Cassin said people thought she and her co-founders "were crazy." "People told me it was a nice idea, but women just didn't invest this way," said Cassin.
Two years and $900,000 in investments to women-run businesses later, the group has 29 angel investors building a network of investment and innovation.
On Wednesday, Kim Buffington came in to update the team on how her company, Eden Urban Farms, was coming along with its plan to create sustainable hydroponic produce. She left with a chance to apply for a grant that would help her create a prototype and propel her into the future of new investment possibilities.
The women at the Belle Michigan Fund haven't even made an investment in the enterprise yet. Instead, they are grooming and advising Buffington so she can fully develop her idea and be ready to pitch for money.
Buffington said she never imagined the world of funding would be like this.
"It means everything. Not only are they sharing their experience, they are looking out for me, investing in my success," she said. "I didn't expect to find that, to be honest."
An important cause
Another barrier to the growth of women investors is the idea that if a woman with money is going to "save the world," that means she is going to start a non-profit or a charity, said Oberti Noguera. But she wants women to know that becoming an angel is another good option.
Lawyer Tifani Sadek of Sadek Legal in Wayne State University's TechTown area started her own business providing legal services for technology startups. She moved to Detroit in 2012 to become a corporate lawyer, but saw an opportunity in the new development the city has to offer.
She says women need to understand that investing in a new company is an important cause.
"With Detroit, economic development and philanthropy almost go hand in hand these days," she said. "Philanthropy is great, but investing in businesses here is investing in the city."
In 2013, there were 270 men and women angel investors working in Michigan, an increase of 12 percent from the year before, according to information from the Michigan Venture Capital Association. The advocacy group said 36 Michigan companies received nearly $9.9 million in angel and pre-seed funding. Those 36 companies went on to raise more than five times that investment amount from other sources, proving that angel investment can be an important catalyst for growth.
Applications for the Pipeline Fellow's first boot camp in Detroit were due Monday, but Oberti Noguera is still recruiting for the future. Female angels must be accredited investors, earning $200,000 or more single income or $300,000 or more with a spouse over the last two years, or having a net worth of $1 million or more. Each city ends up with three to five angels enrolled in the six-month boot camp where they will be taught by experienced investors, receive mentorship and practical experience.
That practical experience will be beneficial for both the sharks-in-training and local businesses. Part of the boot camp is a Pitch Summit, which will be held in April, where women entrepreneurs come to pitch their ideas. Generally eight to 10 people pitch and one is chosen to receive investment.
And, says Cassin, every time a woman entrepreneur receives funding, that feeds into the pipeline of potential investors.
"Every single one of these women will become angel investors, every one of them will give back," said Cassin. "That's how you change the world."