Your startup may be doomed to failure if you under-capitalize it from the get-go, but friends and family can only do so much and venture capitalists are looking for businesses that are more established with huge growth potential. Bridging that financing gap has been especially difficult for women-led businesses and for social enterprises.
But Natalia Oberti Noguera has found a new recipe for financing women-led startups focused on social good.
Women+discretionary income+philanthropy=angel investors+women-led social enterprises
Angel investors have more money than mom and use it to get small businesses going. And some moms don't realize they have the opportunity to change the world by becoming angels in women-led, for-profit startups.
Oberti Noguera founded the Pipeline Fellowship to bring women philanthropist into the world of angel investing. Women are now about 12% of all angels in the United States. She believes that women philanthropists get -- and value -- the impact potential of for-profit social ventures.
To combine the concepts of angel investing with social good, the Pipeline Fellowship trains women philanthropists to become angel investors in women-led social enterprises. These angels are women already interested in social good; they also have the wherewithal (a net worth of at least $1 million or an annual salary of at least $200,000) to become angel investors.
From philanthropist to angel
Lawyer and law-firm manager Kelly Hoey did a great job of socking money away during her career, but she left the portfolio-management decisions to her investment advisor. An active philanthropist, she gave time and money to nonprofits and hounded her friends to do the same. But she wanted her money and influence to make a more sustainable social impact. At the inaugural NYC Pipeline Fellowship Conference on angel investing sponsored by Goodwin Procter, Hoey had her "aha" moment.
When a panel of angels revealed that their gut plays a role when making investment decisions, Hoey realized she could do that, too. "My gut is as good as anybody's. I can do this," she realized.
Hoey and Elizabeth Crowell became part of a six-month program in which they, along with eight other women, learned about portfolio strategy, measuring impact, due diligence, term sheets, valuation, and more, valuable enhancements to "gut feel." Each woman committed $5,000 for the group to invest. The angels-in-training were mentored by experienced angel investors, and, as Oberti Noguera likes to say, "We ask the mentors to share their best mistakes because that's how we really learn."
Crowell owns Sterling Place. She likes hands-on learning that can be applied in a real life situation; it "seals in the learning." That was one appealing aspect of the Pipeline Fellowship program. She and Hoey also valued the group learning and decision-making process. Aspiring angel investors shouldn't go it alone, Crowell advises.
Sustainability for social good and personal growth
The program includes a Pitch Summit where selected entrepreneurs are invited to present for a chance to secure an investment from the Pipeline Fellows. The first class of Pipeline Fellows chose to invest in PhilanTech, an online grant-management system that reduces the cost and increases the efficiency of managing nonprofit grants. It will allow more dollars to be used for doing good rather than keeping records.
The benefits of being a Pipeline Fellow went far beyond providing funding to a startup. Participating in the program gave Hoey the confidence she needed to actively manage her investment portfolio. She also realized how much expertise and how many resources she has to offer so she became more involved in startup companies. She co-founded Women Innovate Mobile (WIM) Accelerator and sits on three startup advisory boards.
It's a new view of philanthropy, a new intensity of involvement. But for wealthy philanthropic women, angel investing can generate social good as well as some very satisfying personal growth.