Gender diversity among Seed & Pre-Seed angels

At LocalGlobe we’ve seen time and again how helpful angels can be to founders — particularly at the early stage — through their experience, expertise, and network. In fact, identifying relevant complementary angels is often the first topic we work on closely with founders once we commit to back them. But beyond individual value-add, we believe that diversity within angel syndicates also matters. Why?

First, much like diversity in lived experience across a company and its leadership team is key to facilitating diversity of thought and thereby better outcomes, so does the founders’ support system — in which angels can play a significant role. In other words — it’s the smart thing to do.

Second, while angel investing has clearly become a meaningful path for learning, networking, and wealth creation, it remains largely inaccessible to underrepresented groups within the tech industry. Which is why enriching the diversity of angels is also the right thing to do, and over time it unlocks a virtuous cycle as diverse angels are more likely to attract other diverse angels.

So we decided to examine the gender diversity among the angels we’ve co-invested with at Seed & Pre-Seed. This analysis aims to equip founders, VCs, and angels with benchmarks from our portfolio on the numbers, check sizes, and diversity of angels investing at Seed & Pre-Seed, and with some suggestions on how to enhance the diversity of angels on such cap tables.

These stats clearly show that the gender gap among angels is staggering on all dimensions, which means that founders and angels — active and prospective — are missing out. This can and should change, as brilliantly articulated and demonstrated by two founders we’ve backed: here by Michelle You @ Supercritical, and here by Natasha Vernier @ Cable.

So what can founders do to construct a more diverse angel syndicate?

Bridging such a whopping gap requires purposeful action — if you don’t make it a priority, it’s not going to happen! Here are some specific measures to consider, that also apply to diversity beyond gender:

1. Ensure a diverse funnel of potential angels — not every angel you speak to will want to invest, and you won’t necessarily want to include every angel that does. Just as in hiring, you can’t hope for a diverse outcome if you don’t have a diverse set of qualified candidates. Explicitly ask your existing or committed investors, VCs or angels, as well as fellow founders to introduce you to relevant diverse angels they know.

2. Reach out to people with the relevant profile even if they’re not angels yet — identify specific areas of support you’re looking for and people in your and your investors’ extended network who may be able to provide it. There are many seasoned operators who are keen to help founders through invaluable insight or access around certain markets, technologies or functions, but for various reasons haven’t angel invested before. If they’re interested to get involved, offer them proactively to angel invest while openly managing their expectations and potential concerns.

3. Don’t make check size a barrier to entry — there is no correlation between check size and value-add. Absolutely none. For various reasons potential angels from underrepresented groups may not be in a position to or comfortable with investing sizable amounts of their personal money. Don’t let it stop them. Sometimes they’ll be the most helpful ones on your cap table.

4. Give yourself time to optimise for value-add — typically you’ll first have the bulk of your financing round secured with VC funds or several “heavy” angels leading. Instead of trying to then wrap up the entire syndicate in one go and as soon as possible — do a first close with them, and take another 2–3 months to thoroughly explore other angels as described above. Especially those who haven’t invested as angels much or at all, would often need more time to get over the line and you should try to accommodate it. No founder wants to fundraise longer than they have to, but it should be far less stressful once most of the capital has been wired to the company’s bank account. We encourage a first and second closing in most of the Seed & Pre-Seed rounds we lead, and sometimes commit to underwrite up to a certain additional amount of capital, so founders have the confidence that they’d raise the full amount even if they don’t find additional angels.