We have begun a series about women who invest in early stage companies. The two most prominent types of early stage investors are angels and venture capital firms. The real difference between angels and VCs is that angel investors invest their own money and VCs invest other people’s money (OPM) or money given to them from institutions. Venture capital firms have overhead that must be paid for, including salaries (sometimes large ones) that must be paid before any returns or profit can be paid out to their customers or investors.
Angels have historically invested in very early stage companies, such as companies that have an idea, but their product or customer base is not yet proven. Respectively, Venture Capital firms habitually have invested when a company has a product, customers and even revenues. Over the past few years, the stage of the companies in which angels and VCs have invested has blurred. Angels have gained expertise and tend to invest in companies at several stages while VCs have begun to invest in early stage companies because that is where many big opportunities lie.
We are collecting data on women who invest as either angels or in their positions in VC firms. We will be featuring more articles about women in VC firms and individual women angels but we thought it was important to write about the strongest organized group of female angel investors. Golden Seeds was founded in 2004 by Stephanie Newby (formerly Stephanie Hanbury-Brown). In 2005, Peggy Wallace joined the group. Since then, Golden Seeds has grown remarkably and on their web site, they report having 240 angel members. www.goldenseeds.com That number reflects a growth in members during the past six years of nearly 12,000%. The number of members in Golden Seeds is exponentially more than the number of women who hold decision-making positions on investments in VC firms. That is very powerful.
There is a critical mass of women (and a few men known as “golden dudes”) who are members of Golden Seeds and have stepped up to write checks to support female funded companies. Over the past several years, Golden Seeds and its members have written individual checks totaling $34 million and have funded 42 different female founded companies. According to the 2011 Halo Report, Golden Seeds is the fourth largest angel investing group in the US and was the third most active in terms of financings completed in 2011.
To further expand its reach, in 2011 Golden Seeds also raised a $26.5 million fund to invest strictly in female founded companies and has already invested in a number of female founded companies in 2012. In addition to finding individual investors to join its powerful network, Golden Seeds was able to tap into a market of others who wanted to invest in female founded companies and wanted to have the investment decisions made by experts.
As stated on its website, Golden Seeds is dedicated to delivering above market return through the empowerment of women entrepreneurs and the people who invest in them. Its vision is to realize the true value of diversity in management by producing higher returns, equipping women to become successful investors in a high-risk-high-reward segment of the capital markets, and to provide a rewarding business environment in which both men and women can thrive.
The company operates four primary businesses: an active national angel investor network, a growing family of venture capital funds, an emerging private equity business, and an educational academy for women that teaches them about angel investing and venture capital.
Golden Seeds also has Fund 1 LP- a vintage 2008 fund with $3.8 million in committed capital and Golden Seeds Funds 2 LP- a vintage 2011 fund with $26.5 million in committed capital. A list of the Golden Seeds portfolio companies, can be found on their web site along with other valuable content and the application procedure for female founded companies wanting to apply for investment.
Check back periodically for our future editions, as we hope to feature the founder of Golden Seeds and other women investors to learn from their experiences.
This article was written by Min Jung Yoo, a summer intern from Brown University. http://jumpthru.net/about/#team
In the interests of disclosure, Deborah Jackson is a member of Golden Seeds.