A LinkedIn Series Diving Into the Personas of Women Investors and How to Mobilize Them.
Women are in the top levels of executive leadership and have significant power and wealth. Yet, the obstacles to capital for both women startup founders and women investors still persist. To better understand these obstacles, How Women Invest recently commissioned never-before-examined research to understand the difference between how women and men invest, and to identify how to motivate more women to invest in startups. Using the actionable data in this benchmark research will help VCs, financial advisors, and wealth management companies access the untapped potential of female accredited investors.
Women are savvy and sophisticated investors and understanding what motivates them to invest is key to unlocking women’s wealth as a source of startup funding. In this series, we are diving into the personas highlighted in the How Women (and Men) Invest in Startups groundbreaking research report. Understanding these personas sheds light on the common factors that motivate women to invest in startups, the friction points that hold these investors back, and how founders and the venture funds that invest in them can address these friction points. Last week we took a closer look at The Self-Reliant Investor.
Four Personas Identified
How Women (and Men) Invest in Startups examined existing research as well as responses to a proprietary survey of qualified accredited investors in the US. Analysis of the data yielded four distinct personas of women investors: the second is the Collaborative Investor.
What is the Collaborative Investor?
Collaborative investors, like self-reliant investors, are confident and rely on their own knowledge and research, but to a lesser extent. Collaborative investors also include others in their investment decisions, such as spouses/partners, financial advisors and investment groups. Investors in this category are likely to be Gen Xers, business owners and have a portfolio of $2.5 million or more. They have a consultative investment style that blends outside advice with their own research and knowledge.
Even though they are savvy, collaborative investors seek information from credible and trustworthy sources. There is an opportunity here for wealth management firms, online platforms and investment influencers to help fill in any gaps in information for these investors - such as investor scorecards or due diligence. Because these investors are less likely to invest as LPs, they are an opportunity for small, emerging, and diverse manager funds which don’t require writing a check of more than $25,000.
The Collaborative Investment Style
Collaborative investors are actively directing the building of their wealth. This category of investors are:
Growth-oriented investors who maximize returns but consider capital preservation.
The second most likely persona to be investing in startups directly.
The third most likely persona to be an LP.
To a lesser degree than self-reliant investors, they rely on their own knowledge and sometimes do research on their investments.
They consult with their spouses/ partners, financial advisors, and investor groups they belong to on investment decisions.
How to Motivate Collaborative Women Investors: What Does a Company Do to Get Her to Invest?
This group of investors are a market opportunity for crowdfunding platforms and SDIRAs, especially if the women are business owners. Collaborative investors are motivated primarily by growing their portfolios, followed by ensuring gender equality and making a social or environmental impact with their investments. To attract these women, emphasize that investing in startups is a way to grow and diversify portfolios while providing female founders funding, increasing capital to WOC founders, and closing the wealth gap for women.
Collaborative investors will pass on an opportunity if it is too time-consuming, illiquid, or risky. Here are five ways collaborative investors overcome resistances, ranked from most desirable:
Investing alongside experienced investors.
Professional management of the investment process.
Allocating investments across several startups.
Investing with a community whose values align with theirs.
Investment of $25,000 or less.
Regardless of investment style, investing in startups is a win/win strategy for women. If more women invest in startups, more women-led startups will receive the capital they need to scale their businesses and make a difference in their industries. Understanding what motivates women with different investment personas is just one step in the journey to unlocking women's wealth as a significant source of start up funding and changing the face of venture capital.