A LinkedIn Series Diving Into the Personas of Women Investors and How to Mobilize Them.
Women can leverage their wealth and passion for social responsibility to create a more robust, inclusive economy. 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.
Women are deliberative in their decision-making process, especially in the face of uncertain economic times. Their reluctance to invest is often due to a gap in information. Filling the gap in information is an opportunity for wealth management firms, online platforms, investment groups, and startup investment influencers. Once women have the data, they have high confidence in their ability to reach their investment goals.
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. We have already taken a closer look at The Self-Reliant Investor and The Collaborative 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 third is Mission-Driven.
What is a Mission-Driven Investor?
Mission-driven investors are loyal to and rely heavily on their financial advisors and wealth management firms. This group of investors is often retired or nearing retirement, they are not likely to be interested in SDIRAs and doing follow-on investments on crowdfunding platforms. Mission-driven investors are likely to be Baby Boomers, retired or near retirement, with portfolios of $2.5 million or more.
To continue to earn these investors’ loyalty, wealth management firms can emphasize that investing in startups is a way to complement their philanthropy and make money. Mission-driven investors can go beyond their donations to social causes to leverage the power of the markets to create change that is personalized to their values by investing in small, emerging, and diverse managers or individual startups.
Mission-Driven Investment Style
Mission-Driven investors are the least likely persona to be confident in their investing abilities and to be actively engaged in managing their portfolios. They are the most likely to rely on financial advisors. These women are:
More likely to care about capital preservation than ROI
Least likely to be investing in startups
Investing in startups to make an impact that is aligned with their values and mission.
Loyal to their wealth advisors and value their advice.
How to Motivate Mission-Driven investors: What does a company do to get her to invest?
The primary motivation for Mission-Driven investors is making an impact that is aligned with their values and mission. To attract mature investors, the minimum check size may need to be as low as $10,000. These investors are less concerned about ROI and are likely to treat the investment like a donation. Financial advisors are in the position to help mission-driven investors identify startup investment opportunities that are aligned with a high net work individual’s philanthropic investments. This persona is most concerned about their investments being locked up for a long period of time. Secondary marketplaces that enable people to sell private companies do exist, but are not user-friendly enough for this persona.
These investors become hesitant if an investment is too illiquid, time-consuming, or risky. To overcome these hesitations, Mission-Driven investors will seek out (ranked from most desirable):
Investing with a community whose values align with theirs
Access to investment education in a safe environment
Investing alongside experienced investors
Investment of $10,000
To engage wealthy women in investing in startups, it is important to understand the common traits that reveal different groups’ investment behavior, values, barriers, and expediting factors to investing in startups. Their differences show that a multifaceted approach is needed to attract investors. Understanding the different investor personas can help to bring more women into the world of investing, increase startup funding and change the face of venture capital. By investing in startups, women can personalize their investment portfolios to reflect their specific values. Regardless of investment style, investing in startups is a win/win strategy for women.