Fund head puts lack of women angel investors down to information asymmetry

A shortage of information around tech startups has made women sceptical of investing in early-stage businesses. So, says IDF Capital CEO Polo Leteka.

Leteka — who runs the Johannesburg based I’M IN tech accelerator — has invested in several startups through a Section 12J vehicle (which allows investors to get tax incentives if they place amounts in such a fund, which then invests in small businesses). She did not name the 12J.

She adds that her experience in investing in tech startups has mainly been developed through the accelerator which sources contributions from corporate investors and then invests these in the startups it works with.

She says other than often having less capital to invest than men, there are a number of reasons why women aren’t investing in tech start-ups.

“My sense is that because women typically tend to want to do a lot of homework before making important decisions, including investment decisions, the information asymmetry around such businesses has made them somewhat sceptical of investing at such an early-stage,” she says.

She however says that with the ecosystem growing and maturing, there will soon be sufficient data in the market that will enable women to better understand how to assess investment opportunities in the sector.

‘The information asymmetry around tech startup has made women sceptical of investing at such an early stage’

“This has certainly been our experience through I’M IN in that we took time to get to a point where we developed an appropriate investment assessment matrix for this market.

“We took a very cautious approach initially where we would co-invest with people with a proven track record in this space and learnt as we better understood the business models. We have now started becoming lead investors in these startups precisely because we now better understand how to assess them and support them on their growth paths,” she says.

‘Hold women-focused initiatives’

To encourage more women investors she says specific programmes should be held from time to time by ecosystem players to target women entrepreneurs.

“This is something that we at I’M IN and IDF Capital have identified as our focus area going forward and we will be doing specific calls for entry into our I’M IN accelerator and calling for women in tech looking for VC funding to come to us.

“It really is one of the most effective ways of improving the participation of women in sectors that they have traditionally not participated in.

She says it has been proven the world over that gender-diverse teams create better outcomes in business. “The key factors that determine success and great returns in the marketplace, such as intuition, inclusiveness, patience, resilience, these come from gender diverse leadership. These factors are typically found in women as a combination.”

Leteka argues that successful businesses leaders are more in tune with their market, employees and stakeholders. “They have the ability to bring in new ideas to solve problems, and develop the relationships to empower more people to be successful within the organisation and with their customers,” she says.

“From our investing experience we saw that successful businesses leverage on diversity to deliver higher profit and returns at lower risk,” she adds.

‘No difference being a woman’

While some may argue that women investors are looked at or treated differently than male colleagues are, Knife Capital partner Andrea Böhmert doesn’t believe that this is the case.

Böhmert was one of the five Angel Investors behind the Google Umbono programme in 2011. The programme invested in five companies, two of which — TaxTim and SampleBoard are still in operation.

“I am not convinced that it is so much of a male or female issue. I believe that diversity adds tremendous value. If five accountants analyse a business, they will have a similar frame of reference. Add diversity (nationality, gender, social background, professional background) and you will get insights that a homogeneous group will struggle to identify.

“When Keet (van Zyl, Knife Capital partner) and I analyse a business we pay attention to different issues. I don’t think this is because I am female — I think it is because I am female, non-South African, with background in strategy and marketing and previous work experience in the tech industry,” she says.

But for Audrey Mothupi, who is an angel investor and head of consulting firm Systemic Logic Group, the issue is investing itself — irrespective of gender.

“Gender provides different opportunities male or female the challenges of a bad investment are universal irrespective of gender — the myth that women don’t invest or are affected most is just a myth. I have worked with driven men and women and in all cases our joint hunger to take on a challenge and succeed was the driver .

“Yes there are challenges like access to finance and networks that one could argue women have more than men — but show me a startup male or female that does not face such?” questions Mothupi.

Read more: Venture capitalist questions why so few women involved in angel investing in SA
Read more: Capitalise on personal networks, venture capitalist Andrea Böhmert tells women

Featured image: IDF Capital executive director Polo Leteka (Supplied)