Female-Led Startups: Angel Investing

In 2022, there was a boom in start-up businesses. Angel and seed investors made a record-breaking combined investment of US$36.2 billion in 2022, which contrasts with a 35% drop in venture capital funding (US$445 billion versus US$681 billion in 2021).

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About 30,000 businesses in the United States receive capital from more than 250,000 angel investors each year, according to the Small Business Administration. In addition, Jo Ann Corkran, co-CEO of Golden Seeds, a New York City-based angel investment group with nearly 350 members, says there are more than 250 organized angel investor groups.

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Loretta McCarthy, co-CEO of Golden Seeds in New York City, believes the economic headwinds of 2022 contributed to the shift in investing.

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Golden Seeds received more funding applications in 2022 than it has ever had before, she says. A total of US$12.6 million was invested by Golden Seeds members that year.

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Women's investment

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A female is in the C-Suite of every business Golden Seeds invests in, McCarthy says. A female in a hiring role is also an important factor to ensure that the company continues to be diverse.

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Getting the first capital needed to get going is a challenge for all entrepreneurs, especially women, McCarthy says.

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According to Corkran, about half of the businesses that Golden Seeds invests in provide business-to-business services like software or technology, a third produce or provide diagnostic equipment for use in medicine, and the remaining half provide consumer goods and services.

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For instance, OtoNexus, an otoscope for an ear check that has an ultrasound tip that can tell whether a virus or bacterial infection is damaging someone's ear, has received investment from members of Golden Seeds totaling about US$1 million across a number of rounds. In this manner, doctors—especially pediatricians—will be able to determine whether an antibiotic is necessary.

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Members of Golden Seeds were angel investors in Little Passports, a kid-focused subscription package that was sold to another business and made around 24 times the initial investors' investment, according to Corkran.

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Considering Possibilities at an Early Stage

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Members of Golden Seeds conduct their own research to determine which startups are a good investment and then share their findings with one another.

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Members point up what they like, don't understand, and need to confirm about a new company or product.

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Before investing, Golden Seeds members give careful thought to a number of factors.

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The members then concentrate on the issue that the company is trying to solve, according to her.

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An evaluation of the leaders is perhaps the most crucial stage before investing in a start-up, according to her.

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For instance, Golden Seeds members funded BentoBox, a flourishing New York City business that offered restaurant marketers services. When the pandemic forced eateries to close, the proprietors switched to internet ordering right away. Early investors received an average return of 10.5 times their initial investment when the company was sold in 2021, according to Corkran.

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According to Corkran, angel investment is a long game and investors must be ready to wait seven to ten years before a business may be sold. After a business is established, Golden Seeds employees and members frequently serve as consultants or board members.

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According to Corkran, between 50 and 60 percent of the businesses that obtain seed funding return for additional capital. According to her, just around one-third of the enterprises in which Golden Seeds invests fail or return investors' money, compared to the 50% of startups that obtain seed funding.

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She says it pays to be patient.