20 Nov

Want to invest in another woman’s business? Article by Renata Cooper for Women’s Agenda

Want to invest in another woman’s business? Article by Renata Cooper for Women’s Agenda

If you are budding entrepreneur Australia is one of the best places to be. Our entrepreneurial ecosystem has been ranked in the top quartile (Australia, Canada, South Korea, United Kingdom and United States comprise the top quartile) of Ernst & Young’s G20 Entrepreneurship Barometer 2013 report. The news is better if you are a woman as Australia has been ranked as the second best place in the world to be a woman entrepreneur in Dell’s gender-focused entrepreneurship index, the Global Entrepreneurship and Development Index (Gender-GEDI).

Globally, women have been forecast to add $6 trillion in additional earned income over the next five years according to the Boston Consulting Group, making them one of the (if not the biggest) emerging segment/market in the world.

These factors give risk averse women the most conducive environment to either become an entrepreneur and set up their own business or invest in someone else’s business. However some women who do have a keen interest in entrepreneurship are overwhelmed by the laborious task of setting up and managing their own business.

The concept of investing in another business or going down the path of becoming an angel investor has traditionally been associated with men. This is slowly changing. Women are capitalising on open markets, innovation and progress to investing their wealth and resources into other businesses. Women angel investors are the new breed mapping the entrepreneurial landscape.

For women who are interested in investing in a business, here a few pointers to consider:

Blend your passion with the business idea: When you start talking money, you will have people coming out of the woodworks trying to convince you to invest in their venture. While most ideas will be good, you will only be able to navigate the rush by identifying what you are passionate about at the outset. Match your passion to the business idea and not the other way around.When I started Forming Circles, I did so to support female entrepreneurship and literacy as these causes were close to my heart. Having come to Australia as a refugee from Slovakia with $20 in my pocket, I wanted to support causes that helped shape my career and personality. This passion gave me direction and stability. There are many cases of people investing in a good business plan only to lose interest after a while.

Take risks and disrupt the landscape: The markets and industries are evolving at a phenomenal pace. To stay ahead of the game, businesses will have to adopt disruptive innovation methodologies. It is easy to trial a better concept of an existing product but nerve racking to do something that has no case study. Unfortunately, there is no magic formula to this approach – only trial and error.Most angel investors do follow trends and the current one is tech start-ups as they are leading the way in innovation and disruptive technology that replaces the old with new. If you aren’t investing in innovation that possibly hasn’t been in the market previously, you will not be part of the change when it happens. This is particularly challenging for women as we are usually risk averse. Be the disrupter, not the ‘disruptee’.

Crowdsourced funding: If you are donating only a portion of the funds to support the business, encourage the entrepreneur to consider crowdsourced funding opportunities. Websites such as Pozible and Kickstarter are great for this.The crowd-funding premise is based on the fact that people who fund the project connect with it more meaningfully and like something back in return. If it is a film then invite them to the opening or get them to contribute to the script, if products then give people free samples, if a service then discounts or acknowledgments on websites and social media – the opportunities are endless and not necessarily expensive.Crowdsourced funding has the added advantages of extending your personal or brand footprint through multiple touch points and introducing you in advance to potential clients. In the initial stages of setting up Forming Circles, our challenge was to get maximum awareness on limited budgets. If we had $50,000 to spend, we’d evaluate to see if it was best used in advertising / direct marketing or investing in a cause that would get 1,000’s of people talking about our brand. The latter was always more effective for us.

Work the digital media: Social media is the new word-of-mouth and social footprint is the new brand equity. For start-ups that are cash tight, social media provides the best platform to communicate with stakeholders, communities and consumers with the most up-to-date information. Explore the possibilities and get the business to construct a cohesive social media strategy from start.This seems obvious in this day and age. But many new businesses fail to capitalise on digital platforms to their convenience due to wariness, lack of understanding or because they think it isn’t relevant to their business. In addition to showing the personality of the brand, digital and social media attracts like-minded followers. For new companies, this pool of followers is the research goldmine that can be used to test new ideas and thoughts.

To see the article in full, please click here

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