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A Simple Guide To Angel Investing For Black Women To Thrive
Career & Money

A Simple Guide To Angel Investing For Black Women To Thrive

Two years ago, Hannah Bronfman, heiress, social media influencer, entrepreneur, and author of Do What Feels Good, shared her IVF, pregnancy, and motherhood journey with xoNecole, but she's also shared her experience with another amazing journey: becoming a passionate angel investor.


Last month, via her TikTok, she shared that she has invested in more than 70 companies in the past five years, and that angel investing “sits at the intersection of basically everything I do.”

@hannahbronfman

Angel Investing Pt 2. Turning Obstacles into Opportunities #startup #investing #finance #business #womeninbusiness #entrepreneur #angelinvestor #blackgirlmagic #cpg #startuptalk

She continued with details on how she once co-founded a venture and faced challenges with getting funding. “I had a difficult time fundraising and was met with all the ‘isms,’ so I just wanted an opportunity to share those learnings with other founders,” she added in the video. (Her Beautified app would eventually get $1.2 million in seed funding and give StyleSeat some tough competition.)

“It was notable that a young Black female started a beauty tech company back in 2013 and the world wasn’t ready for it. And the world isn’t ready for more people of color in the venture capital world. So I’m here to just use my platform to open doors and share knowledge.”

This month, she dropped more jewels, schooling her more than 100,000 TikTok followers about what it takes for a business to qualify for angel investment and highlighting Topicals, a mega-successful skincare company co-founded by Olamide Olowe, the youngest Black woman ever to raise $10 million in funding. The company is one that Bronfman has invested in. (Oh, by the way, other investors in Topicals include Gabrielle Union, Kelly Rowland, entrepreneur and former Netflix exec Bozoma Saint John, and Yvonne Orji.)

@hannahbronfman

The topic is Topical 👏🏽👏🏽 @TOPICALS @Olamide Ayomikun Olowe #startup #investing #finance #business #womeninbusiness #entrepreneur #angelinvestor #startuptalk #cpg #blackgirlmagic #skincare #beauty

Some of you might be reading all of this—heiress, Hollywood’s Black Elite, and millions of dollars—and saying to yourself, “Well, that’s for rich folk,” and you’d be somewhat right. The average net worth of an angel is $1 million (or at least $200,000 in annual salary). On top of that, Black and Brown women founders often face unique struggles when it comes to getting funding for their businesses, including biases associated with race and sex, and make up a small drop in the bucket when compared with the funding successes of startup entrepreneurs getting millions of dollars from their affluent white-male (and very well-connected) peers to make their entrepreneurial dreams come true. And even many of the Black women-led exceptions get funding from celebrity friends or other well-connected links to big money.

But there are indeed everyday professionals, entrepreneurs, and activists seeking to balance the playing field when it comes to investing in the ideas and startups of Black and Brown women, and they're rallying together to create opportunities for others to join them.

This is where some of us can do our part to get involved, put our money where our mouths are, and fund the next billion-dollar Black-owned empire (while building our own generational wealth off the dividends). Let’s get into a few basics of angel investing:

​First Off, What Is Angel Investing?

Well, it’s not to be confused with family and friends donating money to help you make your side hustle the main one. Angel investing involves a savvy and committed investor—taking a high risk and expecting a high gain—who goes into a legal agreement to offer funds for the upstart and/or growth of a new business, particularly when the founder can’t get a traditional loan or funding by other means. The practice was made infamous by Broadway producers who relied on “angels” to support and fund their productions.

There’s typically an expectation of equity or the value of an investor’s stake in the company. Also, angels are more likely to invest in a great idea, unlike a venture capitalist firm, which requires a business to be a proven hit in the market (among other things). Forbes reports that oftentimes, angels invest after a startup company’s initial investment and before they need larger sums from venues like venture capitalists.

Today, angel investing has become a powerful method for funding Black and Brown women-led businesses since these enterprises have seen a decline and are often shut out when it comes to venture capital funding. Angel investing is a great way for everyday citizens to put their dollars behind a business they see is viable, has a solid business plan, has an actual market to serve, and can offer something in a way that solves a problem. (In Topical’s case, for example, had all of those elements in its favor when it launched in 2020, offering inclusive science-based solutions for common skin issues like eczema and featuring everyday models in their ads, embracing imperfections and normalizing depictions of a diverse range of natural aesthetics relatable to the masses.)

Who Can Become An Angel Investor?

While the net worth of the average angel investor is quite high, the minimum amount someone can invest in a company as an angel can vary (like this woman, who started with a $7,000 investment in NasaClip, a company founded by a savvy Black woman ER physician.)

And while accreditation is encouraged (and sometimes required based on some platform’s requirements related to income and other factors), it’s not a legal requirement for an individual to be an angel investor. Everyday professionals, philanthropists, and entrepreneurs, basically classified as non-accredited) get involved via angel investment groups, equity crowdfunding, or angel networks. Some groups have membership fees, while others bring together like-minded women who want to support one another in researching, vetting, and investing in promising budding businesses.

Source: Pexels

Look into networking events, pitch competitions, bootcamps, or courses offered by organizations and platforms like the Institute for Entrepreneurial Leadership, Black Women Talk Tech, Pipeline Angels. AfroTech, The Black Enterprise Disruptors Summit, Level, or Black Girl Ventures.

With angel investing, the risks are high—which these types of investors are often well aware of—and there are challenges and pitfalls, but if you have the disposable income to offer, and you're willing to do lots of networking, conduct lots of research (on groups, investment platforms, and the companies), and commit to intentional, strategic planning of how often and how much you're willing to invest, angel investing is a great way to build wealth while supporting the growth and survival of Black and Brown businesses.

And who knows, maybe you can gather your network and their coins and create an angel investment support group or firm yourself. With Black women’s buying power still standing strong at $1.5 trillion and a collective move to support women entrepreneurs through actual schmoney, a change is certainly on the horizon.

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Featured image via Pexels

 

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