A LinkedIn Series Diving Into the Personas of Women Investors and How to Mobilize Them.
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. Women investors are not monolithic. Their needs differ both functionally and emotionally by persona and demographics. Their differences show that a multifaceted approach is needed to attract investors.
To better understand the obstacles facing women as investors, 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. Our hypothesis: if more women invested in startups, more women-led startups would be funded and able to scale to make a difference in their industries. The research proved our hypothesis and much more. Women are savvy and sophisticated investors. Cater to them and they will invest their money in startups.
In this series, we cover 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, The Collaborative Investor, and The Mission-Driven 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 fourth and final in our series is Equality-Focused.
What is the Equality-Focused Investor?
Equality-focused investors are the most time-starved. They rely heavily on their financial advisors and express the most interest in being involved in investment groups or communities. Equality-focused investors are likely to be business owners, have a portfolio of $2.5 million or more, and fall into the generation X demographic. Their interest in closing gender gaps makes investing in small, diverse-emerging managers and directly in startups very appealing. They are also a market opportunity for crowdfunding platforms and SDIRAs, especially if they are a business owner.
The Equality-Focused Investment Style
The Equality-Focused Investor is a somewhat confident investor. While the growth of their portfolios is important to them, they are more likely than Self-Reliant and Collaborative investors to consider capital preservation. Their investment decisions are influenced by their financial advisors, family, colleagues, friends, and their knowledge. This persona is the second most likely to use financial advisors.
How to Motivate them: What does a company do to get her to invest?
To attract women who are Equality-Focused investors, emphasize:
How the startup or fund closes gender gaps.
The professional management of the investing process, which can be achieved through a wealth management firm.
The value-add investment groups could play in vetting small, emerging, and diverse managers.
They are primarily motivated by ensuring gender equality and making the world a better place.
They are less likely to make an investment if it is (ranked most deterrent to least) too time-consuming, risky or illiquid. To overcome these hesitations, Equality-Focused investors will seek out (listed by most desirable):
Investing alongside experienced investors.
Professional management of the investment process.
Investing with a community whose values align with theirs.
Involvement with a group of investors who research and make decisions together.
Access to investment education in a safe environment.
Allocating their investments across several startups by investing as LPs.
Investing as LPs because it is less time intensive than investing directly in startups.
Investment of $25,000 or less.
Too often, firms treat women as a homogeneous group, ignoring the vastly different needs and preferences of their female clients. The four personas, while not all-inclusive, illustrate how financial services firms can meet the needs of specific types of women investors. 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 roadmap to unlocking women’s wealth to become a source of startup funding. To read the full How Women (and Men) Invest in Startups report and learn more about investment personas, visit the How Women Invest website or click here.