Monday, September 21, 2009

Confessions of a Female Angel


By Francine Hardaway, Ph.D.

I am well aware that there aren't many female angels. It's the same reason there's a much lower failure rate in women-owned businesses.

The reason? Women aren't as risk tolerant and they hit singles rather than swing for the fences. I'd call my own first business either a single or a bunt :-) It did, however, afford me a lavish lifestyle and educate my two kids. I think we really need female angels, because it would make the businesses in which they would invest more successful.

Of course the role of women investors is changing as the workforce changes. In the beginning, I was so happy to be in the workplace at all that I accepted a salary that was a fraction of what I deserved, and then when I started a business I didn't grow if at all for years, and then only when I took on a male business partner (and married him). Now, women are beginning to dominate the workplace, and perhaps they will get some guts.

My dad, who was an investor, a broker, a lawyer, a gambler, taught me to invest. As soon as I got out of school and had a penny in my pocket, I began to invest -- first in the stock market, and then in actual companies. When I couldn't make payroll in my first business, I played the stock market for money. I still remember making a "killing" in Pulte Homes.

My first angel investment was $5,000 in a company started by a former student of mine, and when it went public I received $50,000. That was a fortunate lesson. If I had lost my money, that would have probably been the last angel investment, but the magnitude of the return (in the 1970's) got my attention.

Another crazy investment I made in the 70's was in the New Times, a rag started by two friends of mine that is now Village Voice Media. That was the original Friends, Family and Fools investment; we had a party in someone's house and a group of people who liked Mike and Jim kicked in to support them, never expecting to see a dime back. About ten years later, the boys bought all the original investors out, with appropriate vigorish.

Then I invested again in that same entrepreneur that gave me the 10x learning experience; this time, I (sort of) doubled down, in that I invested $5000 cash and the services of my PR firm. In that investment, the funders of the A round turned out to be the rock band U-2, and the angels (there were six of us) could either stay in or get out. I took my original cash back and stayed in for the rest. That company eventually sued Microsoft for something like $33 million and won; I didn't own many shares by the time the suit was settled, but I can't complain because I rode the stock up and down and even day-traded it a while. I was still more of a stock market fan, but the institutions were beginning to make it harder to win against them as a small investor.

When I came out of Intel after selling my own business, I began to angel invest in earnest. My current company, Stealthmode Partners, used to take equity as part of its fees in those days, and I have more stock certificates than you can ever imagine, the companies long gone.

Another of my investments (founded in 2000) broke even this year for the first time and will begin distribution to shareholders.

In the meantime, I have won and lost millions investing in real estate, a much less interesting business, but with entrepreneurs who need money just like any other. I invested $25,000 in some land outside of Austin, Texas during the dot-com bust and engineered the sale of it to a larger partner, making nearly 10x my investment and staying in for the upside ( if there ever is one after the carrying costs through this downturn).

I also made a ton of money flipping houses from 2004-2006.

And, oh by the way, I lost a million in real estate in 1990. And one partnership I bought into in 1986 still owns some of its original land, although we've been paid back many times over.

Last year, I lost $45,000 trying to start a bank.

Those are just the deals I remember; I've been in about 50 real estate deals and about fifteen tech deals. I am actually a deal junkie. Most of the men I talk to don't have my stomach for roller coaster rides.

But guess what? I'm a woman. They are SMALL deals. I've never lost everything, and I have had a fabulous time. I will obviously do this until I completely lose my senses.

Today’s article is presented by the founder of Stealthmode Partners in Phoenix, Arizona. She is a true angel investor, and has helped package and secure funding for many high-tech startup companies in the area. She has also created positioning and marketing strategies for dozens of growth companies. You can contact her directly at francine@stealthmode.com.


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6 comments:

  1. Francine -

    Great post, and so true. We do not hear as much about female angels - but we are out there.

    My first friends and family investment was in the late 80's with a little start up called Xilinx. Those were fun days in the Silicon Valley. The return on that investment alone allowed me the financial freedom to fund my own business with no outside money in 2002.

    Some of my investments have been successful, and I have lost on others... but in the end I have stayed in the game because when the fit is right, I can fly in, share experiences and resources, and help make a difference in launching a great idea. After all, that's what angels do.

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  2. Great article Francine !!! ;D
    Love how you shared your journey its a beautiful dance of the wins and challenges. When people ask why I dont gamble in Vegas or Atlantic city I laugh, I gamble everyday as an entrepreneur/investor. I love that today there are far more of us around than when we all began.Every step you have taken has allowed me to move more swiftly in mine. AS women we must continue to work together to forge ahead, clearing new paths that will allow more to follow. Here is to you beautiful amazing ladies. I am thrilled to know you :) Your always an inspiration Francine ~ sending smiles ~

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  3. Cool !!
    I want to work with you in the future.
    -http://www.google.com/profiles/matrix2007#about

    Thank you very much !

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  4. I received your link from about 20 women 'angels' and venture investors. The more women who read this the more women will begin to think seriously about directing their own investments. Fabulous. Thanks.

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  5. Francine, I like your observation that women are likely to be more cautious and incremental - - I'd also add two more characteristics which I think speak well for us:

    - we tend to get down to the work that needs to be done and expect to accomplish it efficiently and effectively, and

    - we tend to be pretty straight talkers, without the machinations and politics that diverts attention from the success goal of the company.

    My theory is that when the work day is done, we are heading home to make dinner and don't want to waste time on "wasting time."

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  6. You are a girl after my own heart. Thank you for the inspirational take on your business career, putting things into perspective for the ladies trying to make a go of it in a brutally male business environment. You story comes just at the right time for me, and is really some serious motivational chicken soup for my female entrepreneurial soul.

    With respect

    Jessica

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