Women Who Count
Cindy Padnos on Impact Through Investing
With Women Who Count, our goal is to inspire women leaders who wish to leverage their experience and influence with money to turn their passions into results that make a difference.Women have a much different relationship with money than do men, often failing to fulfill our true potential. To shed a spotlight on this conversation, we are featuring a series of interviews with Women Who Count, selecting inspiring role models to share how they created transformative outcomes through their wisdom, knowledge and influence with money. Cindy Padnos is certainly at the top of that list!
About Cindy Padnos: Managing Partner, Illuminate Ventures
Cindy Padnos is founder and managing partner of Illuminate Ventures, an early stage Micro VC firm focused on cloud computing. Current investments and board seats include BrightEdge, CalmSea, Hoopla, Yozio and Xactly. Cindy has deployed over $100 million in venture funding to help dozens of start-ups reach successful outcomes including prior portfolio companies Red Aril (acq. Hearst Corporation) and WildPockets (acq. Autodesk).
Named one of the Most Influential Women in Technology (Fast Company) and one of the Most Influential Women in Silicon Valley (New York Times), Cindy’s high tech career includes successful stints as a management consultant (Booz), VP of Marketing (Scopus, IPO) and founder/CEO (Vivant, acq. EVLV/ORCL). Follow Cindy @IlluminateVC.
What are the trends you’re seeing right now with women and investing?
I definitely have a “glass is half full” perspective when it comes to this topic. Some individuals look at the statistics and focus solely on the lack of parity, but I like to celebrate how far we’ve come. I’m seeing an expansion of women’s representation in the tech sector as entrepreneurs and as investors. There are signs that women are overcoming some of the historical barriers that have prevented them from entering the “boys club” of angel and venture investing.
Women have a long history of being involved in supporting the causes they care about philanthropically. However, their role was one primarily based on allocation because they weren’t producing the capital themselves. Recently, I’ve noticed women taking more initiative in their investment decisions because they’re making their own money and are no longer dependent on the funds of others. They’re becoming much more actively involved in philanthropic giving at a more substantial level, as well as investing directly into startups via angel investing.
If you look at the percentage of women angel capital investors today, you’ll see that it has grown quite dramatically. Even as recently as five years ago, the number was as small as 5% and today it’s at around 15%. That’s a huge and fantastic growth rate, with varied implications.
How do women investors impact women’s access to capital?
The data is clear: gaining more women VC and angel investors means that more women entrepreneurs will gain the funding they need to build high-growth businesses. Research from the Athena project sponsored by the Kauffman Foundation showed that a VC firm with at least one woman partner was 70% more likely to invest in a woman-led company than a firm with none. In parallel, a study* conducted by the University of New Hampshire found similarly compelling results in angel investing groups. They found that angel groups where women are at least 25% of the investors, saw almost 3 times more the deal flow from women-led companies as those groups dominated by men.
I believe there is a trickle down effect; the more women building their own successful businesses, the more women there will be who will have the experience and financial wherewithal to become angel and venture investors, resulting in more new companies being funded who have women founders.
Historically, women angel investors have tended to allocate smaller amounts of capital than their male counterparts – doing fewer deals at smaller levels than men. The same scale difference holds true for their allocations of personal capital to become Limited Partner investors in VC firms. This behavior is changing as women gain more experience with investment strategies that are still quite new to them. When you’re starting out and something isn’t familiar, every step feels risky. With more women gaining both experience and enjoying success with angel and VC investments, I am optimistic that they will see them in the same way that I think men do – as moderately risky, but potentially lucrative investments that give them an opportunity to be a part of a powerful ecosystem of entrepreneurs, co-investors and like-minded individuals. It’s time for women to take advantage of this opportunity.
*J Sohl and L Hill, 2007 Venture Business Vol 9., No 3. 207-222; Women Business Angels: Insights from Angel Groups, 2007.
Executive Education at UC Davis is uniquely positioned to create custom programs around this topic. The UC Davis Graduate School of Management has a long history of supporting gender balance and women in business. We were ranked No. 1 worldwide for the highest percentage of female faculty members by The Financial Times, and every year we publish a Census of Women Business Leaders in California. Contact Wendy Beecham, Managing Director, for more information on building a customized Women Who Count executive education program.