Last month, Inclusive Angels got together to catalyse a change in the wonderful world of startups and angel investment. Changing the Faces of Angel Investment was designed to bring together founders, experienced and budding angel investors, inspiring a different future for tech businesses.

The objectives of the event, which was sponsored by Michelmores and British Business Bank, were based on the cold hard facts: A founder is 86% more likely to receive equity funding if they are a white man. Yet women-led businesses show returns of 20% more revenue with 50% less money invested.

This doesn’t stack up, and it’s time to start leveling the playing field when it comes to funding. Amy Newton, Founder of Newton’s Theory & Inclusive Angels, outlines, “Women founded startups raised just one 1.9% of all VC funding in 2022. And that was a drop from 2.4% in 2021. Black women founded startups raised just 0.02%. The data is clear. And it’s shocking. And it’s not shifting up. If now’s not the time to make change then when is?”

Amy asks the audience, “Do we culturally still think entrepreneurs are men? And if we do, is that because more men have historically been entrepreneurs?

“We have an outcome that we can historically see and an ASSUMPTION that’s been culturally collectively made on who is an entrepreneur.

“Men and women start businesses, but many more barriers and obstacles exist for women, so we’ve seen more men succeed as entrepreneurs. Especially if we are looking historically, when it was as late as the mid-70’s when women gained the legal right to credit without a male co-signer.

“The invisible challenge is, we have an assumption that because more men have historically been entrepreneurs, that male CHARACTERISTICS are entrepreneurial, and that leads women to have to PROVE that they are ambitious, that they want to grow their business, that they have the resources, the experience and the risk appetite ….. and and yet there’s mountains of research, that when women are invested in, even with less funding, they deliver higher returns.

“Can we take that old cultural assumption and collectively drop it?”

And the key to reshaping the future? Ensuring the community is populated with diverse founders and investors alike, who will create businesses that serve the needs of everyone. And so, Amy welcomed a panel of people who are already being the change we want to see to provide insight on how we can make this happen.

Changing Angel Investment

"A founder is 86% more likely to receive equity funding if they are a white man. Yet women-led businesses show returns of 20% more revenue with 50% less money invested"

— Amy Newton, founder of Inclusive Angels

Introducing the founders

Briony Phillips, CMO at Rocketmakers and Investment Activator with techSPARK, chaired the informative discussion, where we heard accounts from some founders who have been there, done it, and gathered the amusing stories to share with us. Briony hands over to the panellists to introduce themselves:

Up first is Philippa Roberts, CEO & Founder Binit – a waste and recycling service for businesses. She tells the audience, “I’ve been excited about bins for more than 20 years, but if you spend any time with me, I promise you you too will be excited about bins.” Binit is currently raising money over two stages with a total of £1m, looking to close £400k by the end of March.

“I would ask at the end of every call, do you know someone else? Some of my investors are probably tenth degree connections from the start”

Next is Nicola Telford, CEO & Founder of Impact Marketing Club, formerly Views For Change, “which was trying to integrate charitable donations into marketing campaigns in different ways. We found along the way that actually there was a much higher level problem around marketers trying to work out what impact meant to them. So now we’re focusing on the community side of things and how we develop different solutions out of that.

And last but not least, we have Dr. Chen Mao Davies, CEO & Founder of Anya, “a multi-award winning digital health tech startup. It’s using 3D technology and artificial intelligence to support parents during their first 171 days of parental journeys.

“In 2015, I had my son Oscar and like many mothers, I had a huge issue with breastfeeding,” explains Chen. She tells us that after going through all the physical complications, alongside suffering from postnatal depression, she noticed there was a severe lack of technological innovation in this space. As a technologist, Chen felt like she could do something to make a change.

“So I set up the business in 2018 when I had my daughter,” Chen says. “Fast forward many years, Anya is supporting parents from over 100 countries, we are available to 4.3 million users, and I have 25 angel investors, many of whom are women.”

Where do you find angel investors?

First things first, where do you find investors? Angels can often be hidden in plain sight, but as a founder with no experience in raising capital, it can be challenging to find the right people. Luckily, we have three individuals who can share their own methods.

Chen explains that she was lucky enough to have a really proactive and well-connected mentor who introduced her to Anya’s first angel investor. “I had a 40-minute call with them, and that was my first ever pitch. I was breaking all the rules, but by the end, they said right, I’m investing in you.

“They didn’t give me the money straight away after that. They gave me a small amount and then wanted to see me every month. Every time they asked me how I was going to grow the business and offer their advice, then set up the next meeting. This was the process for six months, and then we finally closed the deal.” Now half of Chen’s funding is through Innovate UK grants, but the other half a million is driven through their contacts.

She shares that a key tip when meeting an investor, she always asks them to introduce her to another two investors. From using this, Chen’s network of potential investors grew rapidly.

“I started just basically asking anyone that I knew what an angel investor looked like and where you’re supposed to find them,” Nicola candidly tells the group. “I did the whole trawling through LinkedIn by keywords and set up automations to outreach to them, which was very annoying.” The problem Nicola faced with this tactic is that most people who say they’re investors on Linkedin aren’t actually active angel investors who are ready to invest.

Nicola echoes Chen’s advice: “I would ask at the end of every call, do you know someone else? Some of my investors are probably tenth degree connections from the start.”

The process of finding investors can undoubtedly be uncomfortable. “It’s a weird kind of speed dating, isn’t it?” Phillipa reflects. “We go for coffee, and they’ve got money, and you want it. You both know why you’re there, but you’re not gonna say. You talk about your family, your pets and your holidays. I find it quite weird.”

Phillipa says she found most of her investors at pitching events – Binit successfully made it to the final of the Autumn 2022 Silicon Gorge Pitching Competition – and other tech networking communities. “But actually, my largest angel was kind of by accident,” she explains.

“It was somebody who I was working with in consultancy work. I was talking to them about projects I had on and I said this raising thing is awful. I’m really not enjoying it. People are just dragging me around. I just wanted people to say no more quickly. 

“One day we went for coffee, and they said, “Look you sound desperate, you shouldn’t do this. I’m just going to give you the money.”

How do you ensure investors are a good fit?

Finding an investor that aligns with your values is arguably the hardest part of the process, but potentially the most important. As all investors will have advice to give, and usually come with conditions that have to be met, it’s important as a founder that they understand your vision. Whilst establishing boundaries such as realistic time scales, returns and growth can help prevent misunderstandings, angel investment always comes with risks associated on both ends.

Phillipa tells us that despite meeting an individual, and thoroughly discussing morals, values and aspirations, at the end of the day angels are people, and people’s priorities change. As a founder, you have to be prepared for the interests of your angel investor to pivot.

“What I found out is that whoever chooses to invest in you, really believes in you. They are your allies”

She continues to say, “In some ways working with a grant fund where you just tick a box and send a report, is easier. They’re really clear in what they want and what the steps are.” However, angel investment isn’t all about money.

“But, you can’t go around to their house,” says Phillipa. She tells the group an anecdote from when she met one of her angels at their home as the cafe they had planned to go to didn’t have WiFi, and the angel needed to get Beyonce tickets. “You know, it’s so human to talk about your period and whatever’s happening that day. Sometimes you need that too, don’t you? So that’s different. I haven’t tried that with any funds yet.”

Nicola shares a story of when she misjudged an investor. “There were some red flags that I didn’t see,” she tells us. “It was a barrier for me to grow the business because, essentially, there’s one person who was basically the face of my imposter syndrome.

“At the time I was so desperate to just close the round. I was so desperate to just get to the line and get it done that I was happy to take money from anyone. I think that’s a trap that a lot of founders fall into.”

As she reflects on the experience, Nicola explains that she should have started with a framework for what values she wanted for the company: “We were at idea stage, so we really actually hadn’t fleshed out the questions like, how are we going to run the company etc.

“We had an idea and we wanted to raise money to execute it. We should have worked all of that out long before we ever spoke to an investor.”

But, as Briony highlights, often we learn more from our failures than we do from our successes. The experience comes with positives and negatives, as Chen explains: “What I found out is that whoever chooses to invest in you, really believes in you. They are your allies. You’ll want those people to invest in you because you don’t want just money. You want their support. You want their network.” Chen also found that like-minded investors attracted each other, so once the ball was rolling with a few key players, she was able to find other valuable investors.

Facing the personal challenges of angel investment

Phillipa explains that the pressure that comes in tandem with having multiple investors can be challenging to balance. She says it can ignite the familiar feeling of imposter syndrome, especially when the business may not be hitting all the wildly ambitious milestones you set for yourself at the beginning.

“Some conversations can start off where I end up feeling like I’m defending myself. Yet every quarter I look back and we hit our overarching goals, our growth is ongoing and we’re developing the tech that we said we were going to do,” she says. “It can be a battle to remind yourself that you’re not always on a back foot.”

As women, it can be tricky to juggle personal and professional life. As mothers, both Chen and Phillipa empathise with the difficulty of founding a business with kids around.

“Somebody said to me if you borrow £100 that’s on you. But if somebody gives you £100,000 pounds, that’s on them”

Chen tells us that for the first three years, Anya received no funding. She tells us, “The first couple years, I was still in my day job, working on movies. I commuted to London everyday, so I was working on the business on the train to work, on the park bench during my lunch break, on the way back from London, in the evenings and on the weekends.”

She built the company alongside her full-time job as a Computer Graphics Animations for films, working on the likes of Gravity and Blade Runner – which earned Chen and her team an Oscar and a BAFTA.

Chen explains, “When I raised money I found it really hard because number one, I’m a solo founder, I’m CEO and CTO at the same time. Number two, I’m Chinese. Number three, I’m a women. And number four, I’m raising for a femtech business.”

Due to the nature of her business, Chen struggled to appeal to demographics who had not had the same life experiences as her, i.e. 20 something-year-old white men who were not a mum of two. She tells the audience she believes her passion and determination helped her overcome these barriers. Once her initial investor saw the potential, it encouraged others to follow suit.

Phillipa adds, “I think one of the challenges we have is dealing with all the personal stuff that goes on as well.

“I worked part time for the first two and a half years of my son’s life. Then I set up Binit and my wife took two and a half years out in the next phase before he started school. Having a housewife was brilliant; I can see why men did it for so long. I started a company and raised half a million quid!”

Briony closes the panel with a final question: Would any of our founders not raise investment if they were starting again?

Phillipa says, “I would do it again, but I’d read the term sheet better.” Nicola echoes this: “If I had the knowledge that I have now, I would do it later and wouldn’t raise at idea stage. I would get traction first and then use it as a key to grow, not to play around trying to work out what you’re doing.”

Chen got as far as she could without raising investment. She explains that at the beginning, she had enough money to hit the next milestone. It reached the point where she needed, “strategic direction. You need that acceleration, and you can’t wait too long because your competitors might overtake you, they know what you’re doing. You need all sorts of activities from your investors, and you need more money to speed up the R&D.”

If you do decide to go down the angel investment route, Phillipa reassures the audience: “Somebody said to me if you borrow £100 that’s on you. But if somebody gives you £100,000 pounds, that’s on them.”