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How getting early buy-in from an angel investor can change everything

Only a fraction of venture capital funding goes to women-led companies. For the co-founders of Noa Therapeutics, finding the right angel investor helped fuel the development of their biotech startup.

As co-founders of the Toronto-based biotech company Noa Therapeutics, Serena Mandla and Carla Spina know the odds are stacked against them. “Pharma is a risky business,” says Spina. New therapeutics need years of development — not to mention capital. That risk could pay off for sufferers of inflammatory conditions. Noa is working to develop a new therapy that will address the many factors that make autoimmune disorders like dermatitis such a challenge to treat.

And beyond the challenges of navigating the industry, a pharma company co-founded by two women adds a few more hurdles to jump. Women-led startups account for nearly 20 percent of private-sector businesses in Canada, yet they still only receive a fraction of venture capital, about 2.3 percent of such funding, according to data firm Crunchbase.

Noa aims to address that obstacle, too. “One of our missions is to place value on individuals and understand that they have the capability to grow and to evolve,” says Spina. Women in tech are starting to see the odds against their success lessen, however, and that’s thanks to an increase in both community and government support.

Danielle Graham, a co-founder of The Firehood, a tech community that supports and funds women entrepreneurs, became an early investor in Noa. While she’s encouraged by the positive changes, she’s keen to see 100 percent all-women teams become commonplace. “We want to see that success,” she says.

When Graham kicked off the women-focused tech accelerator at Communitech in 2014, only about 8 percent of startups in the incubator had a woman on the team. That number is now closer to 30 percent. “Now women in tech accelerators are common because of things like the Woman Entrepreneurship Strategy funding, women-focused venture capital funds, a number of women-focused angel networks and models that support early investment, and new initiatives like Women Funding Women,” says Graham.

Here, Graham, Mandla and Spina discuss the state of equity in the innovation space, how angel investment fills a pivotal role for women-led startups and what changes still need to happen.

As a woman entrepreneur, what obstacles do you face when it comes to funding?

Carla Spina: We know the stats. We know that 2 percent of venture capital funds are supporting women. We also know that the majority of women being funded are white women.

Serena Mandla: When we walk in a room, before we even open our mouths, we are already butting our heads against biases.

Spina: Everybody has the challenge to prove the value of what they are doing, but it sometimes feels as though there’s an additional barrier when you are a women-led company. We meet that challenge by being infinitely prepared.

Danielle, you mentioned some of the initiatives that are supporting women. Do you feel there’s been a serious attempt to address the gaps?

Danielle Graham: I’m thrilled by the amount of buy-in I’ve seen from organizations, funding initiatives, government support, corporate support. I remember going to my first Startupfest to promote Fierce Founders — we were counting on our hands how many other women we could see. Last year, the Women in Tech pitch competition had more pitches than all combined pitches from men and women in the Best of Fest.

How important is it to you to see women in the tech and investment space?

Spina: You need champions, and you need someone at the table who looks like you and can relate to you. That’s hugely important — there is a level of understanding and support that results from having a similar worldview and similar life experiences.

Mandla: I went to a PWHL game this past weekend and I spent half of the game fighting back tears. To see women hockey players playing in sold-out stadiums was a good reminder that representation does matter — it does have an impact on what little girls can see themselves growing into. We aren’t little, but it does really matter to see other women in the boardroom, or to see other women leading companies.

Why are angel investors particularly important for women-led businesses?

Graham: It’s a very different model to talk about women who are putting up their own capital as angels. For venture capitalists who are professionals in the field with institutionally backed funds, there’s a lot of structure and rules, and a lot of things are dictated by the limited partners, the investors. With an angel, it’s a very clear-cut decision: This is my money, and I’m investing directly.

Mandla: We have many individual women investors who’ve rallied around us and supported us. It might be that they’ve experienced similar limitations in their career, so they are more cognizant of the importance of stopping and listening as opposed to immediately dismissing us. But we also have other folks who aren’t women who are also lovely angel investors and supporters.

Graham: We’re seeing a massive wealth transfer for women, which means there’s going to be a massive market for individuals. This is a big opportunity. That’s also why I focus on women, because I think it’s the biggest gap for underrepresented talent that could have exponential growth. It’s a pure business opportunity — these types of entities are not charity.

What impact did early investment have on your growth?

Spina: That early-stage investment is everything. We’re not university affiliated and not personally wealthy. You need certain facilities to create a biotech company. Early on, we had an incredible number of supporters who pulled favours for us and lent us things. It was a village that allowed us to get started and it was a village of investors who saw us individuals beyond statistics. For that we are forever grateful because they gave us an opportunity.

What’s the next big challenge for Noa?

Spina: With the funds we’ve secured, the next step is working with external researchers, academic partners and collaborators to validate the therapeutic value of our drugs in animal models so that we can move forward in the safety studies to enable submission for clinical trials.

What could encourage more investment in women entrepreneurs?

Spina: Fostering growth and talent development within the community can drive change. The Ontario Biosciences Innovation Organization (OBIO) has supported us from the very beginning through the very beginning through its Women in Health Initiative (WiHI). That fund not only allowed me to pay myself, but also allowed us to have mentors and advisors who could support the development of our therapeutics. The opportunities for learning, for corporate development, are extremely limited when you don’t have the resources or connections to facilitate that.

Graham: The majority of VC dollars go to very few companies. The companies that raise hundreds of millions of VC dollars are high growth, high potential and high scale, and as soon as we have one woman in that category, we’ll see those numbers change much more significantly.

Why hasn’t there been that woman-led big success case example?

Graham: Venture capital in Canada has only existed for a few decades and it’s spun out of private equity. So, a lot of financial institutions and specialists were the ones to start this, versus entrepreneurs or individuals who know what those early stages of growth look like.

So, VCs may need to envision different models for success?

Graham: Exactly. And so, if we go back to those basics, we can question everything. We need diverse perspectives, which Canada has in abundance. When we don’t see that represented in our tech ecosystem, then we’re missing talent. And why are we losing talent? Where are high potential and entrepreneurial individuals getting lost? Women entrepreneurs have the ideas, the potential and the capabilities, but if they’re not getting the support — and it takes a village to build a successful company — we shouldn’t be pointing fingers at anyone, we should be questioning the health of the overall ecosystem.

This discussion was condensed from two interviews and edited for clarity.

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Photo courtesy of Noa Therapeutics

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