Angel Investing and Driving Change

Angel investing serves as a powerful catalyst for innovation, economic growth, and community empowerment. By providing financial support to early-stage startups and entrepreneurs in exchange for equity ownership, angel investors not only help bring groundbreaking ideas to market but also fuel economic growth, create jobs and bring life-changing products and services to market to enhance economic resilience.

This article is based upon an interview with Marcia Dawood on how angel investing impacts industries, communities, and even personal legacies. Marcia is especially passionate about helping women receive funding from angel investing. We will show why it’s more than just financial backing—it’s a catalyst for meaningful change.

Discovering Angel Investing

I knew very little about angel investing until I met Marcia at a speaking seminar. Initially, the term "angel" brought to mind heavenly beings and charity, and I assumed this type of investing involved simply giving money away to nonprofits or organizations in need. However, I soon discovered that angel investing is far more dynamic and impactful than I had imagined. It’s a process that benefits not only the recipient but also the investor, offering both financial and personal rewards.

Angel investing allows individuals to support ventures they are passionate about, often with relatively small amounts of money. There are seminars and conferences designed to guide potential investors in aligning their investments with their interests. Beyond financial returns, one of the most valuable aspects of angel investing is the sense of community it fosters. In today’s fast-paced, often isolating society, the meaningful connections formed among investors can be as rewarding as the investments themselves.

Understanding Angel Investing

Angel investing plays a pivotal role in driving innovation and fostering change by providing early-stage funding to startups and entrepreneurs with transformative ideas. Unlike traditional financing methods, angel investors often step in when businesses are too young or risky to attract venture capital or bank loans. By offering not only capital but also mentorship and industry connections, angel investors empower entrepreneurs to bring groundbreaking products, services, and technologies to market. Many angel investors have a background in a specific area of business and find it invigorating to invest in a related field of their background.

Angel investing plays a critical role in driving innovation and fostering economic and societal progress. Its impact includes:

·?????? Fueling Innovation

• Supports the creation of solutions to pressing challenges across industries like healthcare, technology, sustainability, and education.

·?????? Driving Societal Change

• Funds startups addressing social and environmental issues, enabling mission-driven businesses to thrive.

·?????? Generating Jobs and Stimulating Economies

• Creates employment opportunities and stimulates growth in local economies.

·?????? Promoting New Ways of Thinking

• Encourages innovative approaches that ripple across industries, shaping the future of business and society.

In essence, angel investing is about more than financial growth—it’s a powerful tool for enabling positive change on a broader scale.

Understanding Philanthropic Investments

Philanthropic investments are a powerful way to create meaningful, long-term impact by blending the principles of giving with strategic outcomes. Unlike traditional donations, philanthropic investments are designed to support initiatives, organizations, or projects that address pressing social, environmental, or cultural challenges. These investments often go beyond immediate relief, aiming instead to drive systemic change by funding sustainable solutions in areas like education, healthcare, environmental conservation, and economic empowerment. By focusing on measurable results, philanthropic investors ensure that their contributions not only provide resources but also promote growth and innovation in underserved or high-need sectors.

Philanthropic investments and angel investing differ primarily in their goals and expected outcomes. Philanthropic investments focus on generating social or environmental impact, often prioritizing mission-driven initiatives over financial returns. These investments aim to address societal challenges, such as poverty, education, or sustainability, and may be structured as grants, program-related investments (PRIs), or donations.?

In contrast, angel investing is centered on providing early-stage funding to startups or small businesses with the expectation of financial returns. While some angel investors may choose to support ventures with a social impact, their primary goal is typically to help innovative businesses grow and eventually profit from their success. Both approaches create value but cater to different motivations—philanthropy focuses on societal change, while angel investing emphasizes business growth and innovation.

Where to Start with Angel Investing

Starting with angel investing requires a combination of research, strategic planning, and an understanding of the risks and rewards involved. The first step is to educate yourself about the process and the role of an angel investor. Books like Do Good By Doing Well by Marcia Dawood, Angel Investing by David Rose or Venture Deals by Brad Feld and Jason Mendelson provide valuable insights into the startup ecosystem. Additionally, online platforms like AngelList and Gust offer resources, communities, and opportunities to explore potential deals. Joining local angel investor networks, such as the Angel Capital Association (ACA) in the U.S., can connect you with experienced investors, provide deal flow, and offer mentorship.

Once you understand the basics, the next step is to define your investment strategy. Determine how much you’re willing to invest and set realistic expectations about potential returns and risks, as most startups fail to deliver significant financial outcomes. Diversifying your investments across multiple startups and industries can help mitigate risk. Start by participating in smaller funding rounds or syndicates, where you can pool resources with other investors to learn the ropes. Attending pitch events or demo days hosted by incubators and accelerators like Y Combinator or Techstars can also expose you to promising ventures. Ultimately, angel investing is about balancing due diligence with the vision to support innovative ideas, all while aligning your investments with your values and goals. Marcia has connected with a whole community of investors and has found the process very rewarding.

Women Angel Investors

The landscape of angel investing has seen a significant increase in female participation in recent years. In 2023, women comprised 46.7% of angel investors, up from 39.5% in 2022 and 33.6% in 2021.*

This upward trend reflects a growing presence of women in the investment arena, contributing to a more diverse and inclusive funding environment.

Despite this progress, female angel investors continue to face notable challenges. Barriers such as limited access to deal flow, underrepresentation in high-level networks, and the need to balance social and family obligations can impede their investment activities. Additionally, a perceived lower risk tolerance and a tendency to seek comprehensive knowledge before investing may delay their entry into the market.**

Addressing these obstacles is essential to ensure that more women can participate fully and effectively in angel investing, thereby fostering a more equitable and dynamic investment ecosystem.

Applications and Takeaways

• Educate Yourself
• Explore online platforms for resources and opportunities:
• Join networks
• Define Your Investment Strategy
• Attend pitch events or demo days hosted by incubators and accelerators like:
• Focus on balancing due diligence with your passion for supporting innovation and aligning with your personal values.

Additional Resources

Do Good By Doing Well: Invest for Change, Reap Financial Rewards, and Increase Your Happiness by Marcia Dawood

Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups by David Rose

Venture Deals: Be Smarter than Your Lawyer and Venture Capitalist by Brad Feld and Jason Mendelson

* https://www.inc.com/sam-blum/nearly-half-of-angel-investors-are-women.html?

** https://businessangelinstitute.org/blog/2024/03/07/gender-diversity-the-impact-of-female-angel-investors/?

Our Guest

Marcia Dawood is the author of Do Good By Doing Well, TEDx speaker, Podcast host, and an early-stage investor who serves on the Securities and Exchange Commission’s Small Business Capital Formation Advisory Committee. Marcia is especially passionate about helping women receive funding from angel investing. We will show why it’s more than just financial backing—it’s a catalyst for meaningful change.

The Host

DEBORAH JOHNSON, M.A. has 25+ years working as an entertainer, composer, producer, author and speaker. Her keynote, "The Hero Inside" stirs audiences to not settle for merely playing as an accompanist to their dreams. Rather, it is to call upon everything they have inside to be soloist & center stage in pursuing & accomplishing their dreams and potential. This can include pursuing a new avenue or expanding on a current area of business, especially at mid-career or the halftime of life. Get more free downloads & links at: DJWorks. Websites: DeborahJohnsonSpeaker.com; GoalsForYourLife.com; DJWorksMusic.com