Recently, I had the honor of speaking about Investing in Entrepreneurship at the Wilma Magazine 2022 Leadership Accelerator. It was wonderful to share a message that brings together three of my favorite subjects: women, money, and entrepreneurship. Here is a summary of the presentation.
Women should consider our ability to control significant wealth an opportunity and responsibility that our ancestors and the women that have come before us could only dream about. It’s a privilege denied to women in other parts of the world today. Don’t let this opportunity pass you by. Commit to being a lifelong learner to gain confidence in managing your money and investing. Think outside the box and go beyond the monetary side of investing and the definition of assets. Imagine using the assets you control to support the things you want to see in the world. Invest both your financial resources and your non-monetary resources (such as time, relationships, and social capital) in ways that are consistent with your values and goals.
Personally, I’m on a mission to empower women to achieve financial independence through entrepreneurship. Everyone can begin to invest in entrepreneurship if you just open your mind about what investing really means. Invest in the innovators, creators, and people who are obsessed with solving problems. They are entrepreneurs.
When women invest in entrepreneurs, we raise the wealth on both sides of the table. Wealth is created from the income and valuation in the entrepreneurial ventures, as well as financial returns to the investors themselves. I think of this as the best of both worlds. This is women investing in women to both build wealth, support change, and accelerate closing the wealth gap. It’s a win for both the investors and the entrepreneurs.
To put these words into action, I’m going to share 10 ways you can invest in entrepreneurship starting today. The first 5 ideas don’t even require any money. Are you willing to commit to trying at least one of them?
1. FRIENDSHIP. Being an entrepreneur is lonely. Reach out to your friends who are entrepreneurs and support them by spending time together and being a good listener. If you don’t have friends who are entrepreneurs, go find some. If nothing else, we provide good stories, entertainment, and plenty of laughs.
2. SOCIAL MEDIA: Comment, share, and like posts by entrepreneurs. Better yet, create your own posts and tag the entrepreneur or a small business. Help spread the word about their business and the problems they can solve!
3. RECOMMENDATIONS: Tell your friends and share news about entrepreneurs with your network. Leave positive reviews of their businesses, products and services. And if your experience wasn’t positive – let the entrepreneur know so they can learn, hopefully even solve your problem and maybe even delight you in a way you never expected.
4. BANKING: We don’t think about it a lot, but your bank deposits are converted to loans to other people and businesses. Does your bank make loans to people and entrepreneurs in communities you want to support? Ask the question!
5. REFERRALS AND INTRODUCTIONS: Refer great service providers, suppliers, qualified job candidates and interns to entrepreneurs. Introduce media contacts, bankers, investors and other people who may be able to support the entrepreneur and their business.
Let’s pause here for a second. To this point, the first 5 ideas for investing in entrepreneurs have been non-financial. They don’t cost you any money. Can you commit to doing at least one of these ideas today?
Now let’s move up a level and start talking about using your money to support entrepreneurs.
6. PURCHASES: Shop local or with small businesses. I think we’re all familiar with this one. As the saying goes, just do it. Become and stay a customer of entrepreneurs, small businesses, and local service providers.
7. CROWD FUNDING: Be an early adopter and encourage the ideas and products you love by investing in crowdfunding campaigns. Many of these require less than $50 to join, and your money can go a long way towards getting a new product to market by a passionate entrepreneur.
8. INVEST IN TARGETED MUTUAL AND INDEX FUNDS: Value-aligned investing doesn’t have to hurt your financial returns! Seek out funds that are aligned with your values, and know where your money is being invested by the fund manager. Some funds invest in products for women, female founders, or other demographic groups. Find and invest in funds that are aligned with your values and interests. These may even be available as investment options in your 401k plan or IRA.
These next two ideas are limited to accredited investors because these carry the highest level of financial and investment risk. You shouldn’t make these types of investments if you can’t afford to lose the money. I’m not an investment advisor (I am married to one) and I’m not offering financial advice, but from my personal experience, this is not where you want to start investing in entrepreneurship. It’s more like graduate school, and again only if you can afford to take the risk of losing the money.
9. INVEST IN ANGEL FUNDS: You make one decision to invest in the fund, then the fund managers (usually professionals) decide on the investments in specific companies. There is usually a $50,000 minimum for this type of investment, and you need to be able to wait up to 10 years for the fund to mature. These should not be considered liquid investments and are high risk.
10. DIRECT INVESTMENTS: This is where you are making a financial investment in a privately held business. You are “writing a check” and expect to get more than that much back. This is the direct financial support for an entrepreneur or a small business. Just to be clear, I’m not including buying publicly traded stock or mutual funds in this category. I’m talking about privately held companies where your stock is illiquid and usually cannot be sold. Again, this carries significant risk.
Was my last (and highest risk) idea where your mind first went when thinking about the idea of investing in entrepreneurship? The idea of a direct cash investment in a small business? I think that’s perfectly natural since we’re often wired to think in terms of money as the most common form of investment. When it comes to investing in entrepreneurship, you can help in so many ways you may have never imagined before. Many of the ways you can invest in entrepreneurship don’t even require your money. Hopefully, I’ve opened your mind to a few of them.
Embrace the power you have. Understand that investable assets can be both monetary and non-monetary, financial and non-financial, tangible and intangible. Gain the confidence to take control of those assets and invest them in entrepreneurs, small businesses, and organizations that share your values and are creating or advancing the change you want to see in the world.
In closing, women have never had more power in investing than we do today. Don’t abdicate that power. Seize control, be deliberate and intentional with your assets, and you will find that you are supporting the change you want to see in our world. Take your seat at the table and invest in entrepreneurship to increase the wealth of all women and help close the wealth gap.