Here's what's wrong with AWE Ventures, BFTP's fund for women-led startups - Technical.ly Philly

Growth

Jul. 10, 2015 8:32 am

Here’s what’s wrong with AWE Ventures, BFTP’s fund for women-led startups

Donations are not the right fit for an early-stage fund investing in women-led ventures, argues entrepreneur Kim Ramirez.
At the 2014 Women In Tech Summit.

At the 2014 Women In Tech Summit.

(Photo by Flickr user Sarah J, used under a Creative Commons license)

This is a guest post by Sixty Vocab founder Kim Ramirez.

Dear Philadelphia,

Let’s have a conversation about how we’re shaping the future of investing and entrepreneurship as it pertains to women in Philadelphia.

In case you missed it, on June 4, the Alliance of Women Entrepreneurs (AWE) and state-backed venture firm Ben Franklin Technology Partners (BFTP) announced that they’re teaming up to launch AWE Ventures, a $500,000 fund that will invest in early-stage, women-led startups. Funding will come from “donations” made by high net worth women, which will be matched by BFTP.

On the surface, this partnership sounds commendable. Yet, you’ll start to think differently when you learn about their approach.

With this fund, AWE and BFTP will most likely be the only ones reaping the rewards of a successful fund. For the donor, she’ll receive a charitable contribution tax deduction — NOT the 10x return an angel investment could possibly make. This is, at its core, why a donation-based fund is so flawed. It creates a donor class, not an investor class.

As a community, we need to work on educating the next generation of women investors. As a city, we need to expect better from private and state-backed organizations that want to reap rewards of each startup’s hard work.

This is more than a women’s issue. Unfortunately, partnerships like this can lead the way to become the standard, not the exception.

I’ve shared my concerns with AWE and BFTP. I’ve voiced my idea of going on a “roadshow” to talk to Philadelphia women who meet the definition of an accredited investor. I explained where they can find these women — 90 percent work within a 20-block radius of each other! Lastly, I offered my assistance in executing this idea.

Neither organization seemed interested in my idea. That’s OK. It’s better to have this conversation as a community.

Together, we need to understand:

  1. Who reaps the return if the fund is successful? Will AWE be paying itself an annual management fee?
  2. Why aren’t BFTP and AWE educating Philadelphians, specifically women, on how angel investments support a city?
  3. Why isn’t state-backed BFTP setting goals for AWE to increase the percentage of Philadelphia women making angel investments?

This isn’t about me — even though I do run a startup. I won’t be applying for funding from either organization. This is about how our city develops the next generation of women entrepreneurs and investors.

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Our startups will fuel Philly’s economy, make investors money and create a vibrant, sustainable startup community. Private and state-backed organizations need to work on building an ecosystem that elevates us as a whole.

I say, let’s get it right. I say to AWE and BFTP, with all due respect, it’s not too late to change your approach. You still have a chance to get it right, a chance to lead the way. Let’s show the rest of the world how Philly gets it done.

Thank you,

Kim Ramirez

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