Touched by an Angel
Savvy entrepreneurs are looking to wealthy women for funding.
By Elaine Pofeldt

(FORTUNE Small Business) – Angel Investing has long been a boys club. Women today make up only 7.5% of the country's 225,000 angels--individual investors who take equity stakes in startups--according to professor Jeffrey Sohl, director of the Center for Venture Research at the University of New Hampshire. The good news, says Sohl, is that women angels--who control a significant chunk of the $22 billion invested by angels each year--are more likely to bet on other women. And the ranks of female angels are likely to grow. Women angels across the country are increasingly launching investment groups to educate wealthy women on the fine points of dealmaking. The Ewing Marion Kauffman Foundation in Kansas City (kauffman.org) offers seminars called the Power of Angel Investing to help such women link up with entrepreneurs.

Just because female angels tend to look kindly on members of their own sex doesn't mean they're pushovers. Like men, they look for well-crafted business plans in fast-growth industries such as health care and software, for seasoned management teams, and for the chance to pool money with other angels to buy a 5% to 40% ownership stake that the group can cash out in two to five years. And in exchange for the $10,000 or more that individual angels typically invest, some want to help shape the companies.

For capital seekers who pass muster, the payoff can be big. Shoba Purushothaman, 43, launched the NewsMarket in New York City, which provides stock video footage to news outlets such as CNN, with $100,000 from a woman angel in 2000. That led to investments from about 20 angels and ultimately $20 million in venture capital for her firm, which now has $5 million in annual sales.

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.