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Lead Your Team Women in Business

Presence of Female Members Drives Angel Investing

Presence of Female Members Drives Angel Investing

The old adage that there is strength in numbers holds true for women in high-risk angel investment groups , new research shows.

Researchers found that when an angel investment group had a small percentage of women, the group was more cautious about investing. However, when more than 10 percent of the investment group were women, their presence became associated with increased investments. The results surprised the researchers.

"At first the results were counterintuitive, since previous research on women investing, in general, shows women to be more cautious investors, said Jeffrey Sohl, director of the University of New Hampshire Center for Venture Research, who conducted the research along with John Becker-Blease of Oregon State University.  "Since angel investing involves substantial risk , one would assume that this cautious behavior would also be exhibited in angel investors. However, our research indicates that when the number of women in an angel group increases, so does their investment activity as angel investors."

They may just be responding to "stereotype threat." According to this theory, when a stereotype exists about a person, that person will live up to that stereotype when they are in a situation that highlights, or accentuates, this aspect of their status, whether that is gender , race or ethnicity.

"In the context of this research, this means that when there are few women in an angel group, the stereotype of cautious investing is accentuated," Sohl said. "As the number of women increases, there is less of a stereotype — there are more women so they are more recognized for their ability as investors and less because of their gender."

Reach BusinessNewsDaily senior writer Ned Smith at nsmith@techmedianetwork.com. Follow him on Twitter @nedbsmith.