Can women change the game for women entrepreneurs?

Encourage women entrepreneurs.

“It is within everyone’s grasp to become a CEO” – Martha Stewart  

History is full of examples of women empowering other women – even though women are accused of being catty towards other women. Which of course does happen – sometimes.

Yet, today, more than ever, women are discovering that the greatest backing for women entrepreneurs can come from women themselves. Women as investors tend to look to women owned businesses to invest in for many reasons.

It does represent a different angle but it does speak well for women wanting to support and empower other women.

Women in investment are looking to invest in women owned businesses –

Women who are in charge of their investment portfolios believe that they are not adequately recognised by wealth management firms. – this is considered a hard fact for women operating in markers such as the US.  Some of these firms backed by women are specific about where they will invest – in woman owned businesses.

Let’s look at the facts.

Among U.S. and Canadian high-net-worth women, 84% are fully or partially responsible for the family investment portfolio.

Female clients are demanding investment opportunities in companies that are committed to environmental, social and governance (ESG) criteria and making a positive social impact, according to 2018 Insights on Wealth and Worth conducted by U.S. Trust.

That’s not all – women everywhere believe that the economic climate can be a tough one to negotiate and need all the backing they can get.

Women want to use their financial muscle to help other women –

All over the world, women have  displayed a commitment and an interest in investing in women entrepreneurs; often due to the personal connection they feel.

Until recently, opportunities to invest in private companies in the US were limited to accredited investors — wealthy people — who become angel investors. This type of investing takes a lot of time and effort, as well as a significant financial commitment, to be successful as Marianne Hudson, a Forbes contributor, angel investor, and Executive Director of the Angel Capital Association (ACA), has discovered.

Women who have started on their own and have gone on to achieve success, must feel a connection with those who are struggling to succeed with their businesses – one step further, they also feel a camaraderie and fellowship with such women owned ventures.

Female founders have hope with companies like Porfolia, which allows accredited investors to invest in a diversified group of female-founded companies. Other companies, such as CNote and Worthy, allow the general public to invest in small businesses. Which can be great news for women entrepreneurs keen for investments.

Holly’s impact on wealth management –

Holly Ruxin fell in love with capital markets when she realized that they got money into the hands of people that needed it. She began her career at Goldman Sachs in the fixed income derivatives division, where she learned about risk management, complex derivatives, and fixed income products.

When she realized that capital markets had become about using computerized models to make as much money as possible, she became disappointed and moved into wealth management.

Ruxin wanted to help people manage risk in their investment portfolios while investing in sustainability. She became a wealth manager, working at companies such as Morgan Stanley, Montgomery Securities and Bank of America. In 2012, she opened her own firm, Montcalm, which cares about the broader impact that investing has on the world — economically, environmentally and socially.

More recently, she launched Montcalm Capital, which is creating opportunities to invest in private companies via funds using convertible notes.  “It was a dream of mine come true,” said Ruxin. “I wanted to create a machine that connects capital to entrepreneurial investment opportunities.” Investments can be as little as $5,000. Returns are commensurate with the risk. Typically, investors will earn an 8% annualized return on their investment.

The first investment opportunity for accredited investors to indirectly participate in Montcalm Capital’s investment in CLEARAS which uses a natural process — algae, not chemicals — to clean water. CLEARAS has raised venture capital and was about to raise another round. Instead of using an investment bank to help it raise money, .management chose to raise funds from an investment by Montcalm Capital.

Investing in companies that make a  difference –

“We invest in companies that are making a difference,” Ruxin says. Montcalm is a B-Corp, which means it uses the power of business to solve social and environmental problems. CLEARAS management felt that an investment through Montcalm was values-aligned with their company. Besides, if CLEARAS raised more equity capital, more shares and control in the company would be given away.

For now, investment opportunities are limited to accredited investors. In the future, like CNote and Worthy, it will use Regulation A of the JOBS Act to allow all investors — including the average Joe and Jane — to invest. Future investment opportunities could be in a single company or a basket of companies, such as a group of companies led by women.  

Increasingly, women like Holly are adding value to the ventures started by women – women owned businesses are discovering a life line in other women who can indeed become a much needed source of investment.

In the end, it is not only about the sisterhood pulling together – but also about financial prudence and innovation.

Women as business founders and owners, often bring both to the table.

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