Why is investing in early-stage companies important?

The pace of change seems to accelerate with each passing year. Earlier this year, few people were talking about technologies such as ChatGPT or considering the impact AI might have on the economy, society, and privacy. Five years ago, personalized medicine or the use of mRNA were virtually unknown. And ten years ago, many of us relied on multiple electronic devices for navigation, photography, and listening to music. Rapid growth and change have consistently come from new companies and inspiring entrepreneurs.

According to the Angel Capital Association’s John Harbison, “Comparing the top 100 companies on the 1960 Fortune 500 list to the list in 2020, only 17 made both lists. Change and churn is constant in our economy, and new companies are the lifeblood of the renewal process. Our investments are the catalyst and essential for a bright future.” 

Investing in early stage, high growth companies has been the cornerstone of both societal improvements and economic growth. And women entrepreneurs are playing an increasing role in founding companies, accessing capital, and making major contributions to wealth creation, job growth, and overall economic gains. Yet, they still represent a fraction of both founders and investors in these early stage companies. Imagine all of the companies that don’t have a chance because the woman entrepreneur was unable to access the capital she needed to move her company forward.  

Furthermore, the presence of women has been shown to improve investment returns. A number of reports show better returns associated with the presence of women in senior roles. The Calvert Impact Capital Report showed that women serving on boards, occupying leadership positions, or founding companies delivered better returns than companies without women in these roles. The Boston Consulting Group showed that businesses founded by women delivered 2.5x higher revenue per dollar invested than those founded by all men.

How does an early-stage company get the funding to get off the ground? What is an angel investor?

An angel investor (also known as a private investor, seed investor or angel funder) is a high-net-worth individual who provides financial backing for small startups or entrepreneurs, typically in exchange for ownership equity in the company. The angel investor may be involved in a series of projects on a purely professional basis or may be found among an entrepreneur’s family and friends. The investor’s involvement may be a one-time infusion of seed money or an ongoing injection of cash to get a product to market. Angels can invest on their own or join a group of angels as part of a network or member organization. Golden Seeds is a national network of angel investors who invest only in women-led companies.

How does Golden Seeds operate?

Angel investing in the U.S. has grown dramatically since Golden Seeds was founded. Today, Golden Seeds has over 330 active members and is one of the largest and most active of the 250 angel groups in the U.S. Golden Seeds focuses on gender-diversity, believing that gender-diversity produces better investment results. Golden Seeds has played a pivotal role in bringing capital to and accelerating investment in women entrepreneurs.

Golden Seeds offers a unique value proposition as one of the leading national angel networks dedicated to investing capital in early-stage women-led businesses. Golden Seeds has invested over $175 million in more than 240 women-led companies and is the second-most-active angel network in terms of number of transactions. As one of the most established national angel investing organizations, Golden Seeds meets over 1,000 U.S. domiciled companies per year.  Chapters play an important role in cultivating local companies, engaging interested angel investors in their respective geographies and contributing to deal teams and ongoing investment support for our companies. Currently, Golden Seeds has members in 28 states and 8 active chapters—Arizona, Atlanta, Boston, Dallas, Houston, New Jersey, New York, and Silicon Valley—and is a nationally recognized leader in this space.  

Members strive to ensure that promising women-led companies receive the funding they need and have the chance to succeed. They find that Golden Seeds provides the opportunity to utilize their extensive skills and interests. Many also enjoy working directly with early-stage entrepreneurs as domain experts, advisors or board members. 

At Golden Seeds, we believe our work makes a difference by investing in promising new businesses. The investments we are making today in early-stage companies contribute to societal improvements through innovation and will drive growth (both near-term and long-term) in employment, profits, economic expansion, value creation, and tax revenue.  

As John Harbison said, “Our economy would truly stagnate, and even decline, without that engine for growth.”  

To learn more about Golden Seeds or to register for our next Open House, click here.