Women business angels are in demand

It’s hard for startups to access traditional financing instruments like credit and loans in the initial stages. At the same time, only a few young entrepreneurs have enough savings to finance the first few years themselves. Business angels invest in companies in the early stages and also support them with valuable expertise and contacts. The goal is a win-win situation: the startup gets a boost during the key set-up phase, and the business angel benefits from a potential positive return when they exit the business later. More and more women are investing in startups. Women business angels are particularly in demand with women company founders.

According to economiesuisse, around 300 startups are founded each year in Switzerland, mostly by men. In 2022, around 20 percent of companies were founded by women, as reported by Startup Campus, a project commissioned by the Federal Government and Innosuisse. This is around the European average. The percentage of investors is even lower. Only every eighth business angel in Europe is a woman. This was the result of a 2020 study carried out by ECONSTOR. It also shows that women investors are important in helping women company founders obtain more capital, and thereby increase their numbers. Or in other words: more women investors are needed, so that more women found companies.

It seems to be more difficult for women founders to access investment money than for men in the same situation. There are various reasons for this: an experienced manager from the tech, STEM or IT environment who acts as a business angel usually prefers to support a new company in the same industry – and these are often still typically male domains. To make matters worse for women, many men find it easier to sell themselves and their idea. For example, they use more positive adjectives and descriptions. Women are often more critical of themselves and question their business ideas more, even if they are just as good as those of their male competitors. This was the conclusion reached, for example, by a study from the USA, published in the Harvard Business Review in June 2019. Certain societal aspects also matter. Traditional roles are still prevalent in Switzerland according to a study entitled “Women Entrepreneurship” carried out by the Bern University of Applied Sciences (BFH).

But the good news is: women are catching up. According to the Swiss Labor Force Survey (SLFS) carried out by the BFS the proportion of female entrepreneurs was 36.7 percent in the fourth quarter of 2020, compared to only 28.2 percent in 1991. Women business angels who support woman-led startups play a leading role in this change. When founding a company, women attach more importance to a sustainable concept with a social impact, according to a study carried out by the University of Applied Sciences Northwestern Switzerland from 2021. If there are more women investors, the potential for so-called impact investing increases, and therefore the number of women company founders too. A correlation with a positive effect.

The prerequisite for more companies to be supported by business angels is that women founders and investors connect with each other. In principle, Switzerland has a lively startup scene with an active network – partly supported by public money, for example from Innosuisse, and partly through private initiatives. But these networks are not specifically aimed at women. A variety of programs exist to bring women investors and founders together. For example, the SEF.WomenAward; the economic prize for women awarded by the Swiss Economic Forum or the Female Innovation Forum (FIF), that was launched by the Institute for Innovation and Entrepreneurship (IIE) at the ZHAW, the fourth edition of which took place in July 2022. Women investors particularly appreciate getting to know the women behind a business idea. And for founders, networking with potential investors – as well as their financial contribution – is extremely valuable. There is therefore a justified wish that more women could bring their expertise to the startup scene as business angels.