So I got an email about Tesco Backit today. If you’ve not heard about it, think Kickstarter for groceries – the idea being you pledge money to support new businesses and you’re rewarded with the feeling you’re helping an entrepreneur get their product off the ground, and also a few little gifts, depending on how much you offer.
Now, obviously more mums are launching their own businesses, which is great, but it got me thinking about female investors. Why are there so few of them?
Have you ever watched Dragons’ Den and thought you could do better? That if only you had the cash to start with you’d be able to make millions? I’ve always dabbled with the idea of investing small sums as part of portfolio career, as a way of diversifying possible income streams, and also because, well it’s how people get rich right? But how risky is it? And why does it tend to be mainly men who invest?
Not being a trader, or having any financial knowledge whatsover, I’ve always been attracted to what I’ve since found out are called investment crowdfunding platforms – there are a few of them about such as Crowdcube and Seedr. Essentially you can invest as little or as much (within reason) as you like in businesses looking to expand, in the hope that you’ll get a return on your capital. And the early signs are good – the latest research shows that, although it’s still fairly new, crowdfunding is looking like a real success story.
Why so few women?
According to a report from UK Business Angels Association, only 14% of angel investors (an angel investor is someone who puts money into a business for a share of equity) are female but interestingly the there is an increase in the number of young investors (16% are now under the age of 35). So has the internet and the crowdfunding industry making investing more accessible to younger women?
Crowdcube says since launch in 2001, the platform has seen an increase in the numbers of of female investors and entrepreneurs. Its investor base has around 26% of females to 74% males – a stark difference to traditional business angels. Although you can pledge between £10 and £1 million, the average investment on our platform is £1,802 with an average investment portfolio of three businesses.
Does it pay out?
Since equity crowdfunding is relatively new, there haven’t been many huge success stories yet, as investors only get their money back if the company is sold or buys back shares. However, one company that has done amazingly well for investors is Camden Town Brewery, which raised £2,750,000 in April 2015 on Crowdcube and announced in
December 2015 that it had been bought by AB InBev, the largest brewer, and one of the largest companies in the world with 25% market share. The sale delivered a multiple return to its 2,173 investors. Since Crowdcube launched, £4m has been delivered in returns for investors.
But it’s not only female investors who are on the rise, there are also more and more female entrepreneurs raising money through crowdfunding, setting up and expanding their own businesses, which is why I find it particularly attractive. Of course there is always the risk you could lose everything you invest, so you have to a) diversify your investments to spread the risk and b) only invest what you can afford to lose. Which may be why there are fewer women investing. What do you think?
Have you invested in any crowdfunded projects? Would you ever be tempted to try it or does it just sound too darn risky?