Angel investors help UAE’s women entrepreneurs spread their wings
Elissa Freiha, an Emirati of Lebanese descent, and Chantalle Dumonceaux, a Canadian-American, are the founders of the Dubai-based women’s angel investment platform Womena. The pair met as students at the American University of Paris in 2008 and after graduation, both showed an interest in angel investing: Ms Dumonceaux, 27, joined Gust, a New York-based platform which manages group venture capital deal flow, and Ms Freiha, 26, became an active angel investor. In 2013, the women moved to the UAE together to set up their own manager-led investment platform. In total Womena has invested US$462,000 into companies in the UAE, most recently joining fund-raising rounds for comparison site Souqalmal and online insurance platform Bayzat.
Why choose Dubai to launch Womena?
Elissa Freiha (EF): When looking at the global start-up environment, Silicon Valley is the main one but it’s very saturated, and Europe tends to be very traditional. The UAE has a lot of dynamics that made it an ideal breeding ground for early stage angel investment. There’s a lot of funding here that’s not yet stimulated, and most importantly, Dubai has this insatiable desire to innovate and grow bigger, despite all of the challenges that we go through in this region.
Why make it a specifically female platform?
EF: Initially we never thought we should focus on women, but then we noticed we were the only women in the room at investment events. In the US, a minority of investors are female, but here there were no women in this space when we started. After three or four months of searching high and low, we found some female investors, but they weren’t very public. When we launched, we decided to make ourselves very public because women need those role models in finance.
How did you find female investors?
EF: We attended every event and conference that we could find. We read The National’s profiles on female entrepreneurs, and reached out to them. It was also organic referrals – one woman would discover that this was a platform for her, and she’d invite five of her friends. Now the women come to us, we don’t need to find them.
How does your business model work?
EF: We have 37 signed member-investors who pay $2,500 each for membership for their first year. That money barely covers our current costs, we use it for the legal structures. We expect our members to make at least one investment a year and then if their investment does well, we get a cut eventually, much later down the line. The average return for angel portfolios in the UAE is 27 per cent. We’re so far the only fully manager-led angel investor group in the UAE, which means that it’s our team’s full-time job to make this operate. We do all the pre-screening to pick suitable companies to pitch, we host the events, we do due diligence afterwards to prepare investor memorandum reports for our investors, we do all the legal work and facilitate the post-investment management.
Do the companies that you invest in tend to be female-led too?
Chantalle Dumonceaux (CD): About 50 per cent of all the entrepreneurs presented to our investors are women, and women do prefer to invest in other women.
Do women tend to go for safer investments?
CD: I’ve seen females have a preference for slightly less risky companies with a bit of history. Women are oftentimes more motivated by the mission, and if they do it right the money will come. Early-stage investors in general have a very particular mindset, as they’re people with the patience for long-term returns. It’s a minimum of five years before you’ll see a return, and the average is seven.
How successful have your start-ups been?
CD: Since we launched, we’ve received 850 inbound submissions and from there, 36 have pitched to our membership base. We’ve invested in four, with two investments currently pending. Our first two investments, the e-commerce start- up Melltoo, and telemedicine providers Alemhealth, are both now in their next round of funding at two or three times the amount that they started at, so on paper our investors have already at least doubled their capital.
How does the pitching process work?
CD: At our pitch events, held every other month, our preselected entrepreneurs each get eight minutes to pitch, then there’s a 10-minute q&a. It’s quite nerve-racking for them and in cases where something goes wrong, perhaps a technical hiccup, we vouch that they’re good companies and try to get our investors on board with them. The investors let us know whether they’re interested in potentially investing, and about a week later they get their reports and make a final decision.
Do you have any male investors?
EF: We have five men who don’t mind being part of a women’s network that supports women investors. But we don’t actively market Womena to men – they just keep on showing up.
Follow The National’s Business section on Twitter