With No Shortage of Angels, a Question: Where are the Women?

At the annual TED conference in Long Beach earlier this month, Josh Felser, a serial entrepreneur turned full-time investor, ran into a former senior executive at Facebook, who “seemed very knowledgeable, especially about digital media.” After talking at some length, Felser suggested that they start looking at deals together.

What’s so unusual about that? The former executive is a woman, surprisingly few of whom — despite their financial muscle, connections, and know-how, from Google, Zynga, and elsewhere — are becoming angel investors. Indeed, even while startup investing has been largely democratized in recent years, including through platforms like the matchmaking service AngelList, women currently represent “maybe 5 percent, maybe worse” of the 3,100 investors to join the site, says AngelList co-creator Naval Ravikant.

Certainly, women have faced obstacles in the technology space. As recently as three years ago, the National Center for Education Statistics reported that just 17.8 percent of undergraduate degrees from engineering schools went to women, a 15-year low. And because women lack the same number of engineering degrees as men, fewer women nab early engineering positions at tech companies or launch startups, roles that can pay out huge dividends and form the basis of an angel career.

Still, even industry insiders acknowledge it’s strange that more women haven’t elbowed their way to the table.

“I think the idea of angel investing doesn’t occur to women, and I don’t think they have the encouragement,” says Cyan Banister, an active seed-stage investor. Three companies in her portfolio – Rapportive, OtherInbox, and Mykonos – were recently acquired for a collective $100 million plus, and she currently owns stakes in the car service application Uber and the real-time search engine Topsy.

Banister is the first person to admit that she has been helped by her marriage to Scott Banister, an angel investor who cofounded the email appliance provider IronPort and sold it to Cisco for $830 million in 2007. “I’m lucky to have a mentor like him,” says Mrs. Banister, who worked at IronPort as a senior manager of security operations and today runs the social network Zivity.

Banister says her husband’s biggest gift wasn’t investing guidance but simply encouraging her to be less risk-averse, advice that many women may not receive. “Why aren’t there more women sitting at poker tables and flying around in those squirrel suits?” she asks. “None of the women I know who’ve exited from companies with a nice sum of money have thought, ‘I need to reinvest some of this in startups.’ They think instead: ‘I’m going to buy a house. I’m going to put this in Apple stock or something that seems stable.’”

“Sometimes, women just don’t think they can do it,” agrees Sukhinder Singh Cassidy, who has cofounded two companies and worked as an executive within numerous others, including Amazon and Google. “Women underestimate themselves, while men overestimate themselves. You have to sort of lean into risk and have a higher confidence bias, rather than a confidence gap. And I don’t think that gene is bred into women.”

According to Cassidy, the few female entrepreneurs out there are also too busy running companies to commit themselves to investing. While Marissa Mayer and Sheryl Sandberg would be any entrepreneur’s dream backer, they’re a bit busy, jokes Cassidy. Indeed, while Cassidy herself selectively backs startups — including the shopping service Stitch Fix and the mobile payment company Kima Labs (acquired last month for an undisclosed amount by Groupon) — she says it’s impossible to evaluate the “massive deal flow” she receives given her role as founder and CEO of 13-month-old Joyus, an online video shopping service.

“I really believe if you’re going to invest [rather than simply gamble], you have to take it seriously,” she says. “You have to own a chunk of capital. You have to be in the flow of small company advice-giving. You have to have the time.”

The good news, at least, is that women have more role models than ever before. Among them is Caterina Fake, the cofounder of Flickr, Hunch, and, most recently, Pinwheel, a still-in-beta service that invites users to find and create virtual notes that are tied to the places they visit.

Fake says she was contacted “out of the blue” by Etsy founder Rob Kalin, who asked her to curate a gallery on Etsy “when it had just 2,000 users.” While Cassidy notes that many women might be too shy to pursue an angel investment, Fake “logged on [to Etsy], loved the site, and finagled my way into an investment.” (She’s now chairman of the board.)

Fake — whose other investments include Typekit (sold to Adobe), data management software startup Cloudera (creator of the open source software Hadoop), and Stack Overflow (a community of mostly programming and gaming Q&A sites) – says she receives a lot of incoming inquiries because of her extensive experience in social media.

But increasingly, entrepreneurs have also asked her to invest in their companies because, as Fake puts it, “I’m a woman.”

It’s not so outrageous. Fake recalls that when she first encountered Etsy, she tried alerting the few angels she knew to its promise, including LinkedIn’s Reid Hoffman, and Brett Bullington, who sits on the boards of numerous Silicon Valley startups. They thought the site catered to a “bunch of chicks, sitting around knitting,” she says; they passed. In a more recent case, the founders of New York-based Chloe + Isabel, a so-called “social commerce jewelry company,” persuaded Fake to join in a seed round for their business in January of last year, partly because they “thought [as a woman] I’d understand their business.” The company has subsequently raised an $8.5 million round from General Catalyst Partners and First Round Capital.

It’s a growing trend, according to Ravikant. “[T]his used to be a very techie industry so it was mostly male,” he says. “But now that industries like fashion, art, movies, etc., are being changed by software, the investor playing field is leveling.”

Esther Dyson, perhaps the tech industry’s most famous female angel investor, says she’s simply seeing more angel investing in general. “I agree there should be more [women investing],” she says. “But for those who want to do it, it’s not a challenge getting into the best deals.” At a minimum, says Dyson, “It’s a lot easier being a female angel than a female entrepreneur. It’s much easier to invest money than to [attract] it.”