Peggy Wallace spent most of her career working on Wall Street, and when she left in 2003 she was unsure what she would do next. For the first time in her life, during this transition, she became aware of the severe lack of women in finance, and particularly in venture capital and investment markets.
In her native United States, she began to realise that women were being excluded from markets investing in entrepreneurs, either through venture capital or angel investments. So she decided to change that.
She became involved in the founding of Golden Seeds, an angel investment operation focused on promoting female investors to help female entrepreneurs to get the funding they need. Wallace is now Golden Seeds’ managing partner.
“I started wondering why I had never heard of a female investor – why have I never heard of a female Warren Buffet?” Wallace told Women’s Agenda.
She described her increasing confusion about how this whole section of the market had next to no women involved in it – either on the side of the investors or on the side of the entrepreneurs.
“I am still baffled by the fact there can be a whole part of the stock market that completely excluded women – you think of markets as being open and this was very closed. It is still incomprehensible to me,” she says.
The idea behind using a female angel investment organisation to fix this problem is that the lack of female entrepreneurs and the lack of female investors are inextricably linked. The Golden Seeds founders theorised that if they encouraged more women to become investors, they would see a growth in women entrepreneurs in turn. And it worked.
“Ten years ago, on the investor side of things, there was an entire capital market with no women. Other people had identified that there was a problem with women getting funded as entrepreneurs but we were the first to say what we needed to make that happen was to have more women investors,” she told Women’s Agenda.
“We thought that just bringing women into all-male rooms of investors was never going to work unless there were female investors as well, so we decided that we needed to install women investors on a large scale.”
The reasons Wallace and her Golden Seeds colleagues knew their project would only work if they encouraged female investors was that the industry was heavily dominated by inaccessible all-male networks.
“The whole premise of Golden Seeds was that the venture industry was and is extremely male and network and introduction based, it was difficult for women to naturally gain access to the networks,” she explains
“We knew this network effect was a big part of the problem, so we knew by creating female investors we could open up communication between entrepreneurs and investors and allow women to access entrepreneurial channels,” Wallace says.
Over the ten years that Golden Seeds has been operating, the number of female investors has risen from next to none to one in five. Alongside this, the number of companies with women in senior positions getting funded by investors has also risen to one in five. Wallace says she believes there is a clear causal relationship between the two.
Wallace told Women’s Agenda she believes enabling women in this sector is also the key to unlocking better progress towards diversity more broadly.
“It is broadly accepted now that diversity is good for business, but we are all a bit confused at why the numbers are changing so slowly. Our idea is that owning companies has to be part of the movement in order to accelerate the pace of change.”
Like Golden Seeds, Scale has also made significant progress toward this goal in the short time since its inception.
“In 2012 there were 500 angel investors in Australia and 2% were women. Now we have 65 investors at Scale, and 56 of them are women, so in theory we’ve multiplied that number 5 times,” Scale CEO Laura McKenzie told Women’s Agenda.
“I strongly believe the number of women investors in Australia could reach 20% in the next few years, and I think Scale will be instrumental in that process.”
Wallace is currently visiting the Scale Investors team here in Australia in order to encourage sharing of knowledge and experience between the two organisations.
She told Women’s Agenda she believes the relationship between Golden Seeds and Scale will spark significant progress in the investment industry.
“We will all look back one day and see that this relationship was the start of a whole new phase of all of this movement,” Wallace says.
She is committed to continuing to make as much progress as possible towards enabling women both as entrepreneurs and investors.
“The deeper I go into this, the more complex I see it is and the more I see there is to do to make it better,” she told Women’s Agenda.