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Wealthy women donate billions each year. They should also invest in female founders

Two high-profile women in finance say philanthropy and angel investing don’t have to be mutually exclusive.

Wealthy women donate billions each year. They should also invest in female founders
[Photo: iStock]
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Kay Koplovitz and Alli McCartney are friends and advocates for female financial empowerment. Koplovitz is a media pioneer: she founded and served as CEO of USA Networks, now part of NBC Universal. She also is and cofounder and chairman of Springboard Growth Capital, which invests in women-led, fast-growth companies, and she is cofounder and chairman of Springboard Enterprises, a nonprofit that aims accelerate the growth of entrepreneurial companies led by women through access to resources and a global community of experts. McCartney is a managing director at UBS, and founder, Alignment Partners, a private wealth management group at UBS.

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They recently spoke with Fast Company editor-in-chief Stephanie Mehta on how to get more high-net-worth women to invest in female founders.

Fast Company: Are you satisfied with the number of women investing in female entrepreneurs and the dollars they’re investing?

Kay Koplovitz: No. There are not enough women investing in women yet. It’s something I’ve been working on with my colleagues going back 20 years. More than $450 billion has been [donated] by Americans last year in philanthropy, and women are a big part of philanthropy. They give a tremendous amount of money, and they have things they believe in. But they can also invest in missions and values they hold dear.

FC: How can women get started in venture-style investing?

KK: One way is by joining angel investment clubs, which are very prevalent today. When we started Springboard Enterprises back in 2000, about 1% of the angel investors were women. Today, it’s 30%.

Women have stepped up at the very early stages to learn [the process of] how to invest in and start investing with others. I think this is one way for women to think about [aligning their investments with] their philanthropic interests. There are a lot of women who are interested in sustainable products and services. At Springboard Growth Capital, we invested in [online consignment company] The RealReal in 2016 and made four investments in the company before it went public in 2019, and it was a great opportunity for women to invest in something that they love, sustainability and luxury goods.

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Alli McCartney: We’ve read all the research about the power of the purse and the demographics of this country, in terms of age, in terms of wealth, in terms of education. Overwhelmingly, women start businesses; overwhelmingly, women of color start businesses. And the intense period of where you need initial capital is the starting point to sort of equalize this access [because] we still are talking about a male-dominated world in terms of who fills the role of providing the capital.

You still see, whether it’s in our own UBS Own Your Worth research or other research that comes out, this huge gap, where women self-attest to not feeling comfortable or knowledgeable enough to make investment decisions, whether it’s in the angel world, the venture world, or in the public investment world. In addition to that lack of confidence, there’s a huge lack of socialization.

My first job was managing money for employees of Lehman Brothers, and what inevitably happened was that the conversation about investing money is oftentimes what men talk about with their peers on the trading desk, while they’re golfing, or while they’re at a basketball game with their kids. For women, it’s more appropriate or socially acceptable to talk about where you’re giving money, as opposed to where you’re investing money.

FC: There are high-net-worth women who have no problem writing a check for $500,000 to a charity, but a seed investment can be as little as $25,000 and they might see that as hugely risky or outside their comfort zone. Why is that?

AM: I think it’s the incentive mechanisms built into our society. Philanthropy is good and you get a pat on the head and a gold star and social accolades. With investing, you get judged by how successful it is, and maybe not [rewarded] for having actually taken the risk.

KK: We’ve now reached this milestone of a trillion dollars in socially responsible investing. I do think that these two things that we used to think of as hugely different—philanthropy and for-profit investment—are coming together more and more. And so my hope is that we can have this process by which women invest in things that they can help build and support. They then are remunerated, and they can use monetary capital as social capital, and to the extent they have more of it, then they simply invest more and more and more, and you start to create systems and change.

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FC: Why is it important to get more women on the capitalization table, or the list of equity owners, of a private company?

KK: If a woman is on a VC firm investment team, that firm is 70% more likely to invest in a women-led company.  You might ask why? Clearly, women investors are more likely to screen companies led by women because they are pitched by more women. Women founders want at least an opportunity to tell their stories.  Importantly, women may have more knowledge than men do about a company’s product, especially in the digital economy where women make nearly 80% of the decisions or where companies are addressing problems or opportunities directed to women. Communication may be easier and more fluid for women to speak frankly to women as they may share many of the same challenges or need/want the same services.

Women investors may be great connectors to business opportunities especially in sectors where they have experience, act as ambassadors, or in some way promote the company to others. Word-of-mouth is a very powerful marketing tool. Women would like other women to profit from their investment in their company.

The fact is that there is not one reason women want women on the cap table. There are many.

FC: Kay, have you had male founders come to Springboard and ask for your investment that you’ve had to turn down because of Springboard’s focus on women?

KK: It happens fairly frequently. People want to know, why just women and why not men? It’s very easy to explain because there’s such a delta between investment dollars that men get and the investment dollars that women get, and until that gap is closed, we’re going to keep supporting women. Women are an underfunded and potentially over-performing asset class. And now people are talking about not just women but Black entrepreneurs, women of color, of other people from different underfunded segments of our economy.

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FC: What advice would you share with women making their first angel or private investments?

AM: Kay started by helping women in technology because that’s what she knew. And it’s expanded over many years, but the media tycoons I know who invest privately invest in media, the biotech tycoons invest in biotech. The investments that I’ve made are in financial technology, fashion, haircare, and consumer products because I can have a gut there. I can have a view. I can be additive and therefore I’m expanding my reach. So where can you, as an investor, give that kind of tangible advice,

FC: How rewarding is it to invest in women founders?

AM: I don’t think there’s anything like it. I get so passionate about it. I try to bring my friends in. I try to incorporate it in my life. I get an ego boost. I can then take what I’ve learned and apply it to help a client, or bring it to another company I invest in. It can be a very uplifting experience, and financially rewarding.